FORM 10-KSB-ANNUAL OR TRANSITIONAL REPORT UNDER
SECTION 13 OR 15(d)
FORM 10-KSB
(Mark One)
[X] Annual Report Under Section 13 or 15(d) of the Securities Exchange Act
of 1934 [No Fee Required]
For the fiscal year ended December 31, 1999
[ ] Transition Report Under Section 13 or 15(d) of the Securities Exchange
Act of 1934 [No Fee Required]
For the transition period from_______to_______
Commission file number 2-95502
DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES III (Name of small
business issuer in its charter)
New York 13-3251176
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
55 Beattie Place, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
(864) 239-1000
Issuer's telephone number
Securities registered under Section 12(b) of the Exchange Act:
None
Securities registered under Section 12(g) of the Exchange Act:
Units of Limited Partnership Interest
(Title of class)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act of 1934 during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes X No ___
Check if there is no disclosure of delinquent filers in response to Item 405
of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10-KSB. [X]
State issuer's revenues for its most recent fiscal year $1,700,000
State the aggregate market value of the voting partnership interests held by
non-affiliates computed by reference to the price at which the partnership
interests were sold, or the average bid and asked prices of such partnership
interests, as of December 31, 1999. No market exists for the limited partnership
interests of the Registrant, and, therefore, no aggregate market value can be
determined.
DOCUMENTS INCORPORATED BY REFERENCE
None
<PAGE>
PART I
Item 1. Description of Business
Drexel Burnham Lambert Real Estate Associates III (the "Partnership" or
"Registrant") was organized in 1984 as a New York limited partnership pursuant
to the Limited Partnership Law of the State of New York. The general partner of
the Partnership is DBL Properties Corporation ("DBL" or "General Partner"), an
affiliate of Apartment Investment and Management Company ("AIMCO") (see
"Transfer of Control" below). The Partnership Agreement provides that the
Partnership is to terminate on December 31, 2004, unless terminated prior to
such date.
The Partnership's primary business is to operate and hold existing real estate
properties for investment. The Partnership acquired interests in six real estate
properties during 1985 and 1986 and it continues to own and operate one of
those, its 90% general partnership interest in Shallowford Corners Shopping
Center (see "Item 2. Description of Property").
Commencing in June 1985 pursuant to a registration statement filed with the
Securities and Exchange Commission, the Partnership offered 80,000 limited
partnership Units (the "Units"). A total of 60,095 Units were sold to the public
at $500 per Unit. The offering closed on December 31, 1995. No limited partner
has made any additional capital contribution after that date. The limited
partners of the Partnership share in the benefits of ownership of the
Partnership's real estate investments according to the number of Units held.
As of December 31, 1999 the Partnership adopted the liquidation basis of
accounting due to the imminent loss of its remaining investment property. The
first mortgage on Shallowford Corners Shopping Center of $7,750,000 matured
April 15, 1997. On October 15, 1997, the General Partner negotiated a
forbearance agreement with the holder of the mortgage and had operated under
this agreement until the Partnership defaulted on this agreement on December 15,
1999. Subsequent to December 31, 1999, the lender foreclosed on the property and
the property was sold on March 7, 2000 through foreclosure.
A further description of the Partnership's business is included in "Item 6.
Management's Discussion and Analysis or Plan of Operation".
The Registrant has no employees. Management and administrative services are
provided by the General Partner and by agents retained by the General Partner.
Effective October 1, 1998, management of the property was provided by an
unrelated third party.
The real estate business in which the Partnership is engaged is highly
competitive. There are other commercial properties within the market area of the
Partnership's property. The number and quality of competitive properties,
including those which may be managed by an affiliate of the General Partner in
such market area, could have a material effect on the market for commercial
space at the Partnership's property and the rents that may be charged for the
property. The General Partner and its affiliates are not a significant factor in
the United States in the commercial industry.
Both the income and expenses of operating the property owned by the Partnership
are subject to factors outside of the Partnership's control, such as changes in
the supply and demand for similar properties resulting from various market
conditions, increases/decreases in unemployment or population shifts, changes in
the availability of permanent mortgage financing, changes in zoning laws, or
changes in patterns or needs of users. In addition, there are risks inherent in
owning and operating commercial properties because such properties are
susceptible to the impact of economic and other conditions outside of the
control of the Partnership.
<PAGE>
There have been, and it is possible there may be other, Federal, state, and
local legislation and regulations enacted relating to the protection of the
environment. The Partnership is unable to predict the extent, if any, to which
such new legislation or regulations might occur and the degree to which such
existing or new legislation or regulations might adversely affect the property
owned by the Partnership.
The Partnership monitors its property for evidence of pollutants, toxins and
other dangerous substances, including the presence of asbestos. In certain cases
environmental testing has been performed, which resulted in no material adverse
conditions or liabilities. In no case has the Partnership received notice that
it is a potentially responsible party with respect to an environmental clean up
site.
Transfer of Control
On October 1, 1998, Insignia, the sole shareholder of IFGP Corporation,
completed its merger with and into AIMCO, a publicly traded real estate
investment trust, with AIMCO being the surviving corporation (the "Insignia
Merger"). As a result of the Insignia Merger, AIMCO acquired control of IFGP
Corporation and, as a result thereof, the General Partner. The General Partner
does not believe that this transaction has had or will have a material effect on
the affairs and operations of the Partnership.
Item 2. Description of Properties
The following table sets forth the Partnership's investment in its property:
Date of
Property Purchase Type of Ownership Use
Shallowford Corners 12/30/86 Partnership has a 90% Retail Center
Shopping Center interest in the joint 116,000 sq.ft.
Roswell, GA venture which has fee
ownership subject to a
first mortgage
Schedule of Properties:
Set forth below for the Registrant's property is the gross carrying value,
accumulated depreciated, depreciable life, method of depreciation and Federal
tax basis.
<TABLE>
<CAPTION>
Gross
Carrying Accumulated Federal
Property Value Depreciation Rate Method Tax Basis
(in thousands) (in thousands)
<S> <C> <C> <C> <C> <C> <C>
Shallowford Corners $ 7,650 (1) 3-30 yrs 150%/200% DBL $ 5,193
</TABLE>
(1) As a result of adopting the liquidation basis of accounting, the gross
carrying value of the property was adjusted to its net realizable value
and will not be depreciated any further.
See "Note B" to the consolidated financial statements included in "Item 7.
Financial Statements" for a description of the Partnership's former depreciation
policy.
<PAGE>
Schedule of Property Indebtedness:
The following table sets forth certain information relating to the loans
encumbering the Registrant's properties.
<TABLE>
<CAPTION>
Principal Principal
Balance At Stated Balance
December 31, Interest Period Maturity Due At
Property 1999 Rate Amortized Date Maturity
(in thousands) (in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Shallowford Corners (2) $ 7,750 10.00% (1) 04/15/97 (1) $ 7,750
Adjustment to
liquidation basis (100)
Totals $ 7,650
</TABLE>
(1) The mortgage on Shallowford Corners Shopping center went into default on
December 15, 1999. Subsequent to December 31, 1999, the lender foreclosed
on the property. See "Item 7. Financial Statements, Note A" for more
information on the foreclosure.
(2) As a result of the Partnership adopting the liquidation basis of
accounting, the mortgage note payable was adjusted to the estimated net
realizable value of the property securing the debt. The net effect of such
adoption was to decrease the carrying value of the note by $100,000.
Schedule of Rental Rates and Occupancy:
Average annual rental rate and occupancy for 1999 and 1998 for the property.
Average Annual Average Annual
Rental Rates Occupancy
(per sq. ft.)
1999 1998 1999 1998
Shallowford Corners $10.26 $10.05 91% 92%
As noted under "Item 1. Description of Business", the real estate industry is
highly competitive. The property of the Partnership is subject to competition
from other commercial properties in the area. The General Partner believes that
the property is adequately insured. The property is in good physical condition,
subject to normal depreciation and deterioration as is typical for assets of
this type and age.
<PAGE>
The following is a schedule of the commercial lease expirations for the years
2000-2009:
<TABLE>
<CAPTION>
Number of % of Gross
Expirations Square Feet Annual Rent Annual Rent
(in thousands)
Shallowford Corners
<S> <C> <C> <C> <C> <C>
2000 3 3,337 $ 51 4.58%
2001 10 21,459 352 31.78%
2002 5 11,690 150 13.60%
2003 2 2,623 28 2.53%
2004-2005 -- -- -- --
2006 1 45,528 341 30.86%
2007-2009 -- -- -- --
</TABLE>
The following schedule reflects information on tenants occupying 10% or more of
the leasable square feet for the commercial property:
Square Footage Annual Rent
Nature of Business Leased Per Square Foot Lease Expiration
Shallowford
Grocery store 45,528 $7.50 July 2006
Real Estate Taxes and Rates:
Real estate taxes and rates in 1999 for the property were as follows:
1999 Billings 1999 Rate
(in thousands)
Shallowford Corners $ 87 1.2%
Capital Improvements:
Shallowford Corners Shopping Center
During the year ended December 31, 1999, the Partnership completed approximately
$3,000 of capital improvements at Shallowford Corners Shopping Center consisting
of tenant improvements. These improvements were funded from operating cash flow.
No capital improvements were planned for 2000 since the Partnership anticipated
the foreclosure of this property in 2000.
Perimeter Square Shopping Center
During the year ended December 31, 1999, the Partnership completed no capital
improvements at Perimeter Square Shopping Center. The property was sold on July
21, 1999.
Green Valley Hotel
During the year ended December 31, 1999, the Partnership completed approximately
$3,000 of capital improvements at Best Western Green Valley consisting of
furniture and fixtures. The property was sold on August 10, 1999.
Tucson Airport Hotel
During the year ended December 31, 1999, the Partnership completed approximately
$75,000 of capital improvements at the Clarion Hotel Tucson Airport consisting
of televisions, refrigerators, and signage. The property was sold on December
17, 1999.
Item 3. Legal Proceedings
The Partnership is unaware of any pending or outstanding litigation that is not
of a routine nature arising in the ordinary course of business.
Item 4. Submission of Matters to a Vote of Security Holders
During the quarter ended December 31, 1999, no matter was submitted to a vote of
unit holders through the solicitation of proxies or otherwise.
<PAGE>
PART II
Item 5. Market for the Partnership's Common Equity and Related Security
Partner Matters
As of December 31, 1999, the Partnership included approximately 1,835 limited
partners, holding a total of 59,905 units. Affiliates of the General Partner
owned 7,501 Units or 12.52% at December 31, 1999. No public trading market has
developed for the Units and it is not anticipated that such a market will
develop in the future.
The following table sets forth the distributions made by the Partnership for the
years ended December 31, 1998 and 1999 and the subsequent period from January 1,
2000 through March 20, 2000 (see "Item 6. Management's Discussion and Analysis
or Plan of Operation" for more details):
Distributions
Per Limited
Aggregate Partnership Unit
(in thousands)
01/01/98 - 12/31/98 $ 599 (1) $10.00
01/01/99 - 12/31/99 -- --
01/01/00 - 3/20/00 2,800 (2) 46.74
(1) Distribution was made from cash from operations.
(2) Consists of $1,928,000 from sale proceeds and $872,000 from operations.
Several tender offers were made by various parties, including affiliates of the
General Partner, during the years ended December 31, 1999 and 1998. As a result
of these tender offers, AIMCO and its affiliates currently own 7,501 limited
partnership units in the Partnership representing 12.52% of the outstanding
units. Under the Partnership Agreement, unitholders holding a majority of the
Units are entitled to take action with respect to a variety of matters. When
voting on matters, AIMCO would in all likelihood vote the Units it acquired in a
manner favorable to the interest of the General Partner because of their
affiliation with the General Partner.
Item 6. Management's Discussion and Analysis or Plan of Operation
The matters discussed in this Form 10-KSB contain certain forward-looking
statements and involve risks and uncertainties (including changing market
conditions, competitive and regulatory matters, etc.) detailed in the
disclosures contained in this Form 10-KSB and the other filings with the
Securities and Exchange Commission made by the Registrant from time to time. The
discussion of the Registrant's business and results of operations, including
forward-looking statements pertaining to such matters, does not take into
account the effects of any changes to the Registrant's business and results of
operations. Accordingly, actual results could differ materially from those
projected in the forward-looking statements as a result of a number of factors,
including those identified herein.
This item should be read in conjunction with the consolidated financial
statements and other items contained elsewhere in this report.
<PAGE>
Results of Operations
As of December 31, 1999 the Partnership adopted the liquidation basis of
accounting due to the default of the mortgage at Shallowford Corners on December
15, 1999.
Prior to adopting the liquidation basis of accounting, the Partnership realized
net income of approximately $874,000 compared to a net loss of approximately
$1,090,000 for the year ended December 31, 1999 and 1998, respectively. The
increase in net income for the year ended December 31, 1999 is primarily due to
the gain on the sales of the Partnership's properties as discussed below and to
a lesser extent, the recognition of the cumulative effect of adopting a new
accounting principle during the year ended December 31, 1999.
Excluding the operations of Tucson Airport Hotel and Green Valley Hotel, the
losses from continuing operations for the year ended December 31, 1999 and 1998
were approximately $312,000 and $359,000, respectively. The decrease in losses
from continuing operations is due to a decrease in total expenses, which was
partially offset by a decrease in total revenues. Total revenues decreased due
to decreases in rental revenue and other income which were partially offset by
the gain on the sale of Perimeter Square in 1999 as discussed below. Rental
revenues decreased due to the sale of Perimeter Square in July of 1999. Other
income decreased due to lower cash balances in interest bearing accounts.
Total expenses decreased due to decreases in rental operations expenses,
mortgage interest expense, property tax expense and depreciation expense,
partially offset by an increase in general and administrative expense. The
decrease in rental operation expense and mortgage interest expense were due to
the sale of Perimeter Square in July of 1999. The decrease in depreciation
expense was due to assets becoming fully depreciated at Shallowford Corners
during 1999 as well as the sale of Perimeter Square. General and administrative
expense remained relatively constant and included professional fees associated
with operating the Partnership. Included in general and administrative expenses
at both December 31, 1999 and 1998 are management reimbursements to the General
Partner allowed under the Partnership Agreement. In addition costs associated
with the quarterly and annual communications with investors and regulatory
agencies and the annual audit required by the Partnership Agreement are
included.
On July 21, 1999, the Partnership sold Perimeter Square to an unaffiliated third
party, P & H Properties, L.L.C., for net sales proceeds of approximately
$662,000 after payoff of the mortgage and payment of closing costs. The
Partnership realized a gain of approximately $64,000 on the sale. The
Partnership realized a loss on the early extinguishment of the debt encumbering
Perimeter Square of approximately $3,000 consisting of the write-off of
unamortized loan costs.
On August 10, 1999, the Partnership sold the Green Valley Hotel to an
unaffiliated third party for net sales proceeds of approximately $544,000 after
payoff of the mortgage and payment of closing costs. The Partnership realized a
gain of approximately $917,000 on the sale. The Partnership realized a loss on
the early extinguishment of the debt encumbering the property of approximately
$42,000 consisting of a prepayment penalty and the write-off of unamortized loan
costs.
On December 17, 1999, the Partnership sold Tucson Airport Hotel, located in
Tucson, Arizona to an unaffiliated party for net sales proceeds of approximately
$2,060,000. The Partnership realized a net gain of approximately $623,000 on the
sale during fourth quarter 1999. The Partnership also recognized a gain on the
early extinguishment of the debt encumbering the property of approximately
$69,000 consisting of the write off of the excess liability accrued in 1998 for
the estimated fair value of the equity participation feature of the loan (see
"Item 7. Financial Statements - Note B"), partially offset by the write-off of
the associated mortgage discount and a prepayment penalty.
<PAGE>
Best Western Green Valley Hotel and Tucson Airport Hotel were the only hotels
owned by the Partnership and represented one segment of the Partnership's
operations. Due to the sale of these properties, the results of the hotel
segment have been shown as income from discontinued operations and gain on sale
of discontinued operations. The revenues of these properties were approximately
$5,933,000 and $6,914,000 for 1999 and 1998, respectively. Loss from operations
was approximately $378,000 and $461,000 for 1999 and 1998, respectively. The
decrease in loss from discontinued operations was primarily due to the sale of
the Green Valley Hotel in August of 1999 which resulted in only eight months of
losses compared to a full year in 1998.
Liquidity and Capital Resources
The financial statements have been prepared assuming the Partnership will
liquidate during 2000 (see "Item 7. Financial Statements - Note A"). The
indebtedness encumbering the remaining property was in default at December 31,
1999, and the property was subsequently foreclosed on by the lender.
At December 31, 1999, the Partnership had cash and cash equivalents of
approximately $5,836,000 compared to approximately $2,904,000 at December 31,
1998. The increase in cash and cash equivalents of approximately $2,932,000
since the year ended December 31, 1998 is due to approximately $10,317,000 of
cash provided by investing activities and approximately $318,000 of cash
provided by operating activities which was partially offset by approximately
$7,703,000 of cash used in financing activities. Cash provided by investing
activities consisted of property sales proceeds, partially offset by property
improvements and replacements and lease commissions paid. Cash used in financing
activities consisted primarily of repayments of notes payable on sold properties
and, to a lesser extent, payments on the mortgages encumbering the Partnership's
properties, prepayment penalties paid and an appreciation fee paid. The
Registrant invests its working capital reserves in money market accounts.
Distributions from operations of approximately $599,000 were paid to the limited
partners during the year ended December 31, 1998. There were no distributions
during the year ended December 31, 1999. Subsequent to December 31, 1999, the
Partnership distributed approximately $2,800,000 ($46.74 per limited partnership
unit) to the limited partners consisting of approximately $1,928,000 ($32.18 per
limited partnership unit) from the sale proceeds of Perimeter Square, The Green
Valley Hotel, and the Tucson Airport Hotel, and approximately $872,000 ($14.56
per limited partnership unit) of cash from operations. Due to the foreclosure of
the Partnership's last remaining property, the General Partner anticipates
distributing the remaining cash, less reserves needed to terminate the
Partnership during the near future.
The first mortgage on Shallowford Corners Shopping Center of $7,750,000 matured
April 15, 1997. On October 15, 1997, the General Partner negotiated a
forbearance agreement with the holder of the mortgage and had operated under
this agreement until the Partnership defaulted on December 15, 1999. As a result
of the mortgage entering into a default status, the lender foreclosed on the
mortgage and subsequently sold the property on March 7, 2000 for $7,650,000 to
an unaffiliated party.
As a result of the decision to liquidate the Partnership, the Partnership
changed its basis of accounting for its financial statements at December 31,
1999 to the liquidation basis of accounting. Consequently, assets have been
valued at estimated net realizable value (including subsequent actual
transactions described above) and liabilities are presented at their estimated
settlement amounts, including estimated income, net of costs, associated with
carrying out the liquidation. The valuation of assets and liabilities
necessarily requires many estimates and assumptions and there are substantial
uncertainties in carrying out the liquidation. The actual realization of assets
and settlement of liabilities could be higher or lower than amounts indicated
and is based upon the General Partner's estimates as of the date of the
financial statements.
At December 31, 1999, in accordance with the liquidation basis of accounting,
assets were adjusted to their estimated net realizable value and liabilities
were adjusted to their settlement amount and include all estimated costs
associated with carrying out the liquidation. The net adjustment required to
convert to the liquidation basis of accounting was a decrease in net assets of
approximately $269,000 which is included in the Statement of Changes in
Partners' Capital/Net Assets In Liquidation. The adjustments are summarized as
follows:
Increase (Decrease)
in Net Assets
(in thousands)
Adjustment from book value of property and
improvements to estimated net realizable value $ 307
Adjustment of debt to net settlement amount 100
Adjustment of other assets (138)
Net increase in net assets $ 269
Tender Offers
Several tender offers were made by various parties, including affiliates of the
General Partner, during the years ended December 31, 1999 and 1998. As a result
of these tender offers, AIMCO and its affiliates currently own 7,501 limited
partnership units in the Partnership representing 12.52% of the outstanding
units. Under the Partnership Agreement, unitholders holding a majority of the
Units are entitled to take action with respect to a variety of matters. When
voting on matters, AIMCO would in all likelihood vote the Units it acquired in a
manner favorable to the interest of the General Partner because of their
affiliation with the General Partner.
Year 2000 Compliance
General Description
The Year 2000 issue is the result of computer programs being written using two
digits rather than four digits to define the applicable year. The Partnership is
dependent upon the General Partner and its affiliates for management and
administrative services ("Managing Agent"). Any of the Managing Agent's computer
programs or hardware that had date-sensitive software or embedded chips might
have recognized a date using "00" as the year 1900 rather than the year 2000.
This could have resulted in a system failure or miscalculations causing
disruptions of operations, including, among other things, a temporary inability
to process transactions, send invoices, or engage in similar normal business
activities.
Computer Hardware, Software and Operating Equipment
In 1999, the Managing Agent completed all phases of its Year 2000 program by
completing the replacement and repair of any hardware or software system or
operating equipment that was not yet Year 2000 compliant. The Managing Agent's
hardware and software systems and its operating equipment are now Year 2000
compliant. No material failure or erroneous results have occurred in the
Managing Agent's computer applications related to the failure to reference the
Year 2000 to date.
Third Parties
To date, the Managing Agent is not aware of any significant supplier or
subcontractor (external agent) or financial institution of the Partnership that
has a Year 2000 issue that would have a material impact on the Partnership's
results of operations, liquidity or capital resources. However, the Managing
Agent has no means of ensuring or determining the Year 2000 compliance of
external agents. At this time, the Managing Agent does not believe that a Year
2000 issue of any non-compliant external agent will have a material impact on
the Partnership's financial position or results of operations.
Costs
The total cost of the Managing Agent's Year 2000 project was approximately $3.2
million and was funded from operating cash flows.
Risks Associated with the Year 2000
The Managing Agent completed all necessary phases of its Year 2000 program in
1999, and did not experience system or equipment malfunctions related to a
failure to reference the Year 2000. The Managing Agent or Partnership have not
been materially adversely effected by disruptions in the economy generally
resulting from the Year 2000 issue.
At this time, the Managing Agent does not believe that the Partnership's
businesses, results of operations or financial condition will be materially
adversely effected by the Year 2000 issue.
Contingency Plans Associated with the Year 2000
The Managing Agent has not had to implement contingency plans such as manual
workarounds or selecting new relationships for its banking or elevator operation
activities in order to avoid the Year 2000 issue.
Item 7. Financial Statements
DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES III
LIST OF FINANCIAL STATEMENTS
Report of KPMG LLP, Independent Auditors
Consolidated Statement of Net Assets in Liquidation - December 31, 1999
Consolidated Statements of Operations - Years ended December 31, 1999 and 1998
Consolidated Statements of Changes in Partners' (Deficit) Capital/Net Assets in
Liquidation - Years ended December 31, 1999 and 1998
Consolidated Statements of Cash Flows - Years ended December 31, 1999 and 1998
Notes to Consolidated Financial Statements
<PAGE>
Independent Auditor's Report
The Partners
Drexel Burnham Lambert Real Estate Associates III
We have audited the accompanying consolidated statement of net assets in
liquidation of Drexel Burnham Lambert Real Estate Associates III (the
"Partnership") as of December 31, 1999, and the related consolidated statements
of operations, changes in partners' (deficit) capital/net assets in liquidation
and cash flows for each of the years in the two-year period then ended. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
As more fully described in Note A, due to the imminent foreclosure of its
investment property, the General Partner has decided, effective December 31,
1999, to liquidate the Partnership. As a result, the Partnership has changed its
basis of accounting as of December 31, 1999 from a going concern basis to a
liquidation basis.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Partnership as of December
31, 1999, and the results of its operations and its cash flows for each of the
years in the two-year period then ended in conformity with generally accepted
accounting principles.
As discussed in Note B to the consolidated financial statements, the Partnership
changed its method of accounting for a mortgage loan with a participation
feature by adopting the provisions of the American Institute of Certified Public
Accountants' Statement of Position 97-1 "Accounting by Participating Mortgage
Loan Borrowers" on January 1, 1998.
/s/KPMG LLP
Greenville, South Carolina
March 24, 2000
<PAGE>
DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES III
CONSOLIDATED STATEMENT OF NET ASSETS IN LIQUIDATION
(in thousands, except unit data)
December 31, 1999
Assets
Cash and cash equivalents $ 5,836
Receivables and deposits 23
Investment property 7,650
13,509
Liabilities
Accounts payable 79
Tenant security deposit 27
Other liabilities 340
Mortgage note payable (in default) 7,650
Due to affiliate 173
8,269
Net assets in liquidation $ 5,240
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES III
Consolidated Statements of Operations
(in thousands, except unit data)
<TABLE>
<CAPTION>
Years Ended December 31,
1999 1998
Revenues: (restated)
<S> <C> <C>
Rental operations (Note J) $ 1,526 $ 1,722
Other income 110 132
Gain on sale of investment property 64 --
Total revenues 1,700 1,854
Expenses:
Rental operations 413 488
General and administrative 222 221
Mortgage interest 866 949
Property taxes 98 121
Depreciation 413 434
Total expenses 2,012 2,213
Loss from continuing operations (312) (359)
Loss from discontinued operations (378) (461)
Gain on sale of discontinued operations (Note G) 1,540 --
Net income (loss) before cumulative effect of a
change in accounting principle and extraordinary
item 850 (820)
Cumulative effect on prior years of adopting
Statement of Position 97-1 for mortgage
participation -- (270)
Extraordinary gain on early extinguishment of debt 24 --
Net income (loss) (Note L) $ 874 $(1,090)
Net income (loss) allocated to general partner $ 126 $ (11)
Net income (loss) allocated to limited partners 748 (1,079)
$ 874 $(1,090)
Net income (loss) per partnership unit:
Net income (loss) before cumulative effect of a change
in accounting principle and extraordinary item $ 12.12 $ (13.55)
Cumulative effect on prior years of adopting Statement
of Position 97-1 for mortgage participation $ -- $ (4.46)
Extraordinary gain on early extinguishment of debt .37 --
Net income (loss) $ 12.49 $ (18.01)
Distribution per limited partnership unit $ -- $ 10.00
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES III
Consolidated Statements of Changes in Partners' (Deficit)
Capital/NET ASSETS IN LIQUIDATION
(in thousands, except unit data)
<TABLE>
<CAPTION>
Limited
Partnership General Limited
Units Partner's Partners' Total
<S> <C> <C> <C> <C>
Original capital contributions 60,095 $ 1 $30,048 $30,049
Partners' (deficit) capital at
December 31, 1997 59,905 $ (122) $ 5,908 $ 5,786
Distributions paid to limited
partners -- -- (599) (599)
Net loss for the year ended
December 31, 1998 -- (11) (1,079) (1,090)
Partners' (deficit) capital at
December 31, 1998 59,905 (133) 4,230 4,097
Net income for the year ended
December 31, 1999 -- 126 748 874
Partners (deficit) capital at
December 31, 1999 59,905 $ (7) $ 4,978 4,971
Adjustment to liquidation basis
(Note C) 269
Net assets in liquidation at
December 31, 1999 $ 5,240
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES III
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
Years Ended December 31,
1999 1998
Cash flows from operating activities:
<S> <C> <C>
Net income (loss) $ 874 $(1,090)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Cumulative effect of adopting SOP 97-1 -- 270
Gain on sale of investment property (64)
Extraordinary gain on early extinguishment of debt (24) --
Gain on sale of discontinued operations (1,540) --
Depreciation 1,048 1,194
Amortization of loan costs, lease commissions, and
debt discount 57 79
Accretion of debt discount 30 30
Change in accounts:
Receivable and deposits 465 (137)
Other assets 99 (12)
Accounts payable (235) (38)
Tenant security deposit liabilities (20) 4
Accrued property taxes (209) 87
Due to affiliate (93) (494)
Other liabilities (70) 158
Net cash provided by operating activities 318 51
Cash flows from investing activities:
Property improvements and replacements (81) (338)
Proceeds from sale of investment property and
discontinued operations 10,404 --
Lease commissions paid (6) --
Net cash provided by (used in) investing
activities 10,317 (338)
Cash flows from financing activities:
Payments on mortgage notes payable (278) (294)
Distributions paid to partners -- (599)
Loan costs paid -- (25)
Appreciation premium paid (165) --
Prepayment penalty (122) --
Repayment of notes payable (7,138) --
Net cash used in financing activities (7,703) (918)
Net increase (decrease) in cash and cash equivalents 2,932 (1,205)
Cash and cash equivalents at beginning of year 2,904 4,109
Cash and cash equivalents at end of year $ 5,836 $ 2,904
Supplemental disclosure of cash flow information:
Cash paid for interest $ 1,315 $ 1,552
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES III
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
Note A - Basis of Presentation
As of December 31, 1999, Drexel Burnham Lambert Real Estate Associates III (the
"Partnership" or "Registrant") adopted the liquidation basis of accounting due
to the default of the first mortgage on Shallowford Corners on December 15,
1999. Subsequent to December 31, 1999, the lender foreclosed on the property and
sold it to an unaffiliated party on March 7, 2000 for $7,650,000.
As a result of the decision to liquidate the Partnership, the Partnership
changed its basis of accounting for its financial statements at December 31,
1999, to the liquidation basis of accounting. Consequently, assets have been
valued at estimated net realizable value (including subsequent actual
transactions described below) and liabilities are presented at their estimated
settlement amounts. The valuation of assets and liabilities necessarily requires
many estimates and assumptions and there are substantial uncertainties in
carrying out the liquidation. The actual realization of assets and settlement of
liabilities could be higher or lower than amounts indicated and is based upon
the General Partner's estimates as of the date of the financial statements.
Note B - Organization and Significant Accounting Policies
Organization:
The Partnership was organized as a limited partnership under the laws of the
State of New York pursuant to a Certificate of Limited Partnership dated
December 21, 1984. The general partner of the Partnership is DBL Properties
Corporation ("DBL" or the "General Partner"). The General Partner is an
affiliate of Apartment Investment and Management Company ("AIMCO") (see "Note D
- - Transfer of Control"). The Partnership Agreement provides that the Partnership
is to terminate on December 31, 2004, unless terminated prior to such date.
Principles of Consolidation:
The consolidated financial statements include the accounts of the Partnership
and its 90% general partnership interest in DBL Airport Valley Limited
Partnership ("DBLAV") which owned and operated two hotels in Tucson and Green
Valley, Arizona, which were sold during 1999, and its 90% general partnership
interest in Shallowford Associates, Ltd. ("Shallowford"), which owns and
operates a shopping center in Roswell, Georgia. All material inter-entity
transactions and balances have been eliminated in consolidation. In addition,
the consolidated financial statements include the accounts and operations of its
wholly-owned property, Perimeter Square Shopping Center ("Perimeter Square"),
which is a shopping center in Tulsa, Oklahoma, which was sold during 1999.
Use of Estimates:
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
<PAGE>
Fair Value of Financial Instruments:
Statement of Financial Accounting Standards ("SFAS") No. 107, "Disclosures about
Fair Value of Financial Instruments", as amended by SFAS No. 119, "Disclosures
about Derivative Financial Instruments and Fair Value of Financial Instruments",
requires disclosure of fair value information about financial instruments,
whether or not recognized in the balance sheet, for which it is practicable to
estimate fair value. Fair value is defined in the SFAS as the amount at which
the instruments could be exchanged in a current transaction between willing
parties, other than in a forced or liquidation sale. The Partnership believes
that the carrying amount of its financial instruments (except for long term
debt) approximates their fair value due to the short term maturity of these
instruments. As a result of the Partnership adopting the liquidation basis of
accounting, the Partnership's mortgage note payable, which is in default, was
adjusted to the estimated net realizable value of the collateral securing the
debt. The net effect of the adoption was to decrease the carrying value of the
note totaling $7,750,000 by approximately $100,000.
Cash and Cash Equivalents:
Cash and cash equivalents include cash on hand, in banks and money market
accounts. At certain times, the amount of cash deposited at a bank may exceed
the limit on insured deposits.
Tenant Security Deposits:
The Partnership's commercial property requires security deposits from lessees
for the duration of the lease and such deposits are included in receivables and
deposits. Deposits are refunded when the tenant vacates, provided the tenant has
not damaged the space, and is current on rental payments.
Investment Property:
The investment property consists of one retail center and is stated at cost.
Acquisition fees are capitalized as a cost of real estate. In accordance with
SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of", the Partnership records impairment losses
on long-lived assets used in operations when events and circumstances indicate
that the assets might be impaired and the undiscounted cash flows estimated to
be generated by those assets are less than the carrying amounts of those assets.
Costs of investment properties that have been permanently impaired have been
written down to appraised value. No adjustments for impairment of value were
recorded in the year ended December 31, 1998. As a result of the Partnership
adopting the liquidation basis of accounting, the investment property was
adjusted to its estimated net realizable value at December 31, 1999. The effect
of adoption was to increase the carrying value of the investment property by
approximately $307,000.
Depreciation:
Depreciation was provided by the straight-line method over the estimated lives
of the investment properties and related personal property. Subsequent to
December 31, 1999, no depreciation will be recorded under the liquidation basis
of accounting. For Federal income tax purposes, the accelerated cost recovery
method is used (1) for real property over 15 years for additions prior to March
16, 1984, 18 years for additions after March 15, 1984 and before May 9, 1985,
and 19 years for additions after May 8, 1985, and before January 1, 1987, and
(2) for personal property over 5 years for additions prior to January 1, 1987.
As a result of the Tax Reform Act of 1986, for additions after December 31,
1986, the modified accelerated cost recovery method is used for depreciation of
(1) real property over 27 1/2 years and (2) personal property additions over 7
years.
Tenant improvements were depreciated using the straight-line method over the
tenant's lease term.
Loan Costs:
Loan costs of approximately $450,000, have been completely amortized at December
31, 1999.
Participation Mortgage Note Payable:
The Partnership adopted the provision of the AICPA Statement of Position ("SOP")
97-1 "Accounting by Participating Mortgage Loan Borrowers" on January 1, 1998.
The new pronouncement requires a borrower to estimate the fair value of equity
participation features by the lender and accrue such amounts at the inception of
the loan. The offsetting discount is accredited to interest expense over the
life of the loan. The total estimated fair value of this equity participation
feature is $390,000 and was recorded in other liabilities. The cumulative effect
of adopting this SOP at the beginning of 1998 was an increase in the net loss of
$270,000 and the accretion of the discount recognized in 1999 and 1998 was
$30,000 each year. The property with the mortgage with an equity participation
feature was sold in December of 1999 (see "Note G" for further details).
Leases:
The Partnership leases commercial space to tenants under various lease terms.
For leases containing fixed rental increases during their term, rents are
recognized on a straight-line basis over the terms of the leases. For all other
commercial leases, rents are recognized over the terms of the leases as earned.
Lease Commissions:
At December 31, 1999, unamortized lease commissions of approximately $46,000
were written off in the adjustment to liquidation basis because the Partnership
determined that these intangible assets no longer have value. Lease commissions
were being amortized using the straight-line method over the terms of the
respective leases.
Segment Reporting:
SFAS No. 131, Disclosure about Segments of an Enterprise and Related Information
established standards for the way that public business enterprises report
information about operating segments in annual financial statements and requires
that those enterprises report selected information about operating segments in
interim financial reports. It also establishes standards for related disclosures
about products and services, geographic areas, and major customers. See "Note N"
for required disclosure.
Reclassifications:
Certain reclassifications have been made to the 1998 balances to conform to the
1999 presentation.
Note C - Adjustment to Liquidation Basis of Accounting
At December 31, 1999, in accordance with the liquidation basis of accounting,
assets were adjusted to their estimated net realizable value and liabilities
were adjusted to their settlement amount. The net adjustment required to convert
to the liquidation basis of accounting was an increase in net assets of
approximately $269,000 which is included in the Statement of Changes in
Partners' Capital (Deficit)/Net Assets In Liquidation. The adjustments are
summarized as follows:
Increase (Decrease)
in Net Assets
(in thousands)
Adjustment from book value of property and
improvements to estimated net realizable value $ 307
Adjustment of debt to net settlement amount 100
Adjustment of other assets (138)
Net increase in net assets $ 269
Note D - Transfer of Control
On October 1, 1998, Insignia Financial Group, Inc., the sole shareholder of IFGP
Corporation, completed its merger with and into AIMCO, a publicly traded real
estate investment trust, with AIMCO being the surviving corporation (the
"Insignia Merger"). As a result of the Insignia Merger, AIMCO acquired control
of IFGP Corporation and, as a result thereof, the General Partner. The General
Partner does not believe that this transaction has had or will have a material
effect on the affairs and operations of the Partnership.
Note E - Transactions with Affiliated Parties
The Registrant has no employees and is dependent on the General Partner and its
affiliates for the management and administration of all Partnership activities.
The Partnership Agreement provides for certain payments to affiliates for
services and as reimbursement of certain expenses incurred by affiliates on
behalf of the Partnership.
The following payments were made to the General Partner and affiliates during
the years ended December 31, 1999 and 1998:
1999 1998
(in thousands)
Property management fees (included in operating
expenses) $ -- $399
Reimbursement for services of affiliates (included in
general and administrative expenses) 65 95
For the nine months ended September 30, 1998, affiliates of the General Partner
were entitled to receive varying percentages of gross receipts from all of the
Partnership's commercial and hotel properties for providing property management
services. The Partnership paid to such affiliates approximately $399,000 for the
nine months ended September 30, 1998. Effective October 1, 1998 these services
for the commercial and hotel properties were provided by an unrelated party.
An affiliate of the General Partner received reimbursements of accountable
administrative expenses amounting to approximately $65,000 and $95,000 for the
years ended December 31, 1999 and 1998, respectively.
At December 31, 1999, the Partnership owed an affiliate of the General Partner
approximately $174,000 for payroll expenses paid by such affiliate on behalf of
the hotel properties.
Included in other liabilities at December 31, 1999, is a $25,000 note payable to
the co-venturer in Shallowford. The note does not have any stipulated terms for
repayment and it accrues interest at 3% above prime. Interest expense on the
note amounted to approximately $3,000 in both 1999 and 1998. Total accrued
interest payable of approximately $21,000 is included in other liabilities at
December 31, 1999.
Several tender offers were made by various parties, including affiliates of the
General Partner, during the years ended December 31, 1999 and 1998. As a result
of these tender offers, AIMCO and its affiliates currently own 7,501 limited
partnership units in the Partnership representing 12.52% of the outstanding
units. Under the Partnership Agreement, unitholders holding a majority of the
Units are entitled to take action with respect to a variety of matters. When
voting on matters, AIMCO would in all likelihood vote the Units it acquired in a
manner favorable to the interest of the General Partner because of their
affiliation with the General Partner.
Note F - Sale of Investment Property
On July 21, 1999, the Partnership sold Perimeter Square to an unaffiliated third
party, P & H Properties, L.L.C., for net sales proceeds of approximately
$662,000 after payoff of the mortgages and payment of closing costs. The
Partnership realized a gain of approximately $64,000 on the sale. The
Partnership realized a loss on the early extinguishment of debt encumbering
Perimeter Square of approximately $3,000 consisting of the write off of
unamortized loan costs.
The sales transaction is summarized as follows (amounts in thousands):
Net sale price, net of selling costs $ 2,032
Net real estate (1) (1,953)
Net other assets (15)
Gain on sale of real estate $ 64
(1) Net of accumulated depreciation of approximately $2,546,000.
Note G - Sale of Discontinued Operations
On August 10, 1999, the Partnership sold the Green Valley Hotel to an
unaffiliated third party for net sales proceeds of approximately $544,000 after
payoff of the mortgage and payment of closing costs. The Partnership realized a
gain of approximately $917,000 on the sale. The Partnership realized a loss on
the early extinguishment of the debt encumbering the property of approximately
$42,000 consisting of a prepayment penalty and the write-off of unamortized loan
costs.
The sales transaction is summarized as follows (amounts in thousands):
Net sale price, net of selling costs $ 3,102
Net real estate (1) (2,175)
Net other assets (10)
Gain on sale of real estate $ 917
(1) Net of accumulated depreciation of approximately $3,384,000.
On December 17, 1999, the Partnership sold the Tucson Airport Hotel to an
unaffiliated third party for net sales proceeds of approximately $2,060,000
after payoff of the mortgage and payment of closing costs. The Partnership
realized a gain of approximately $623,000 on the sale. The Partnership also
recognized a gain on the early extinguishment of the debt encumbering the
property of approximately $69,000 consisting of the write-off of the excess
liability accrued in 1998 for the estimated fair value of the equity
participation feature of the loan (see "Note B"), partially offset by the
write-off of the associated mortgage discount and a prepayment penalty.
The sales transaction is summarized as follows (amounts in thousands):
Net sale price, net of selling costs $ 5,270
Net real estate (2) (4,730)
Net other liabilities 83
Gain on sale of real estate $ 623
(2) Net of accumulated depreciation of approximately $6,719,000.
Best Western Green Valley Hotel and Tucson Airport Hotel were the only hotels
owned by the Partnership and represented one segment of the Partnership's
operations. Due to the sale of these properties, the results of the hotel
segment have been shown as income from discontinued operations and gain on sale
of discontinued operations. The revenues of these properties were approximately
$5,933,000 and $6,914,000 for 1999 and 1998, respectively. Loss from operations
was approximately $378,000 and $461,000 for 1999 and 1998, respectively.
Note H - Mortgage Note Payable
The principle terms of the mortgage note payable are as follows:
<TABLE>
<CAPTION>
Principal Monthly Principal
Balance At Payment Balance
December 31, Including Interest Maturity Due At
Property 1999 Interest Rate Date Maturity
(in thousands) (in thousands)
<S> <C> <C> <C> <C> <C> <C>
Shallowford Corners $ 7,750 $ 65 10.00% 04/15/97 $ 7,750
1st mortgage in default (1)
Adjustment to liquidation
basis (100)
Totals $ 7,650
</TABLE>
(1) As a result of the Partnership adopting the liquidation basis of
accounting, the mortgage note payable was adjusted to the estimated net
realizable value of the property securing the debt. The net effect of the
adoption was to decrease the carrying value of the note by $100,000.
Note I - Partners' Capital
Pursuant to a public offering, 60,095 Limited Partnership Units ("Units") were
sold at $500 per Unit. During 1994 partners holding 190 Units abandoned their
interests. The calculation of net loss per limited partner unit in 1999 and 1998
is based on 59,905 Units outstanding.
For income tax purposes, the limited partners share 99% and the General Partner
shares 1% (subordinated as defined in the Partnership Agreement) in all profits
or losses from operations until the limited partners have received an 8%
cumulative preferred return on their invested capital. Thereafter, the limited
partners share 90% and the General Partner shares 10% in the profits or losses
from operations.
Cash distributions from sales or refinancings, if any, shall be made to the
partners to the extent available and, as more fully described in the Partnership
Agreement, as follows: first, to the limited partners, until the limited
partners have received an amount equal to their unrecovered invested capital;
second, 99% to the limited partners equal to any unpaid preferred return
arrearage; and third, any remaining excess, 85% to the limited partners and 15%
to the General Partner.
Distributions in liquidation to the partners shall be made pro rata in
accordance with the partners' capital accounts.
In accordance with the Partnership Agreement, limited partners are entitled to
receive an 8% cumulative preferred return on their unrecovered invested capital.
No distributions were made or accrued to the General Partner, since the limited
partners must receive their original invested capital plus any preferred return
arrearage before payment to the General Partner. As of December 31, 1999, the
unpaid preferred return arrearage totaled approximately $26,380,000.
<PAGE>
Note J - Operating Leases and Preferred Returns
Operating Leases
The Partnership leases office and retail space to tenants at the Shallowford
property under lease agreements which expire on various dates through 2006. The
following is a schedule by year of the minimum future rentals, excluding
escalations, required under these leases as of December 31, 1999 (in thousands):
2000 $ 928
2001 830
2002 497
2003 358
2004 342
Thereafter 539
Total $3,494
A major tenant in Shallowford leases approximately 39% of available space under
a lease expiring in 2006. Rental income recognized under this lease amounted to
approximately $341,000 for each of the years ended December 31, 1999 and 1998.
Preferred returns
The DBLAV joint venture agreement provides, among other things, that the cash
flow from operations of both properties will be used first to pay the
Partnership a preferred return on its cash investments.
Note K - Real Estate and Accumulated Depreciation
<TABLE>
<CAPTION>
Initial Cost
To Partnership
(in thousands)
Buildings
and Related Adjustment to
Personal Liquidation
Description Encumbrance Land Property Basis
(in thousands) (in thousands)
<S> <C> <C> <C> <C>
Shallowford Corners $ 7,650 $ 5,882 $ 6,442 $(4,674)
</TABLE>
<TABLE>
<CAPTION>
Gross Amount At Which
Carried
At December 31, 1999
(in thousands)
Buildings
And
Related
Personal Accumulated Year of Date Depreciable
Description Land Property Total Depreciation Construction Acquired Life-Years
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shallowford Corners $ 5,604 $ 2,046 $7,650 (1) 1985 12/30/86 3-30 yrs
</TABLE>
(1) As a result of adopting the liquidation basis of accounting, the gross
carrying values of the properties were adjusted to the net realizable
value and will not be depreciated further.
Reconciliation of Real Estate and Accumulated Depreciation:
Years Ended December 31,
1999 1998
(in thousands)
Real Estate
Balance at beginning of year $ 33,718 $ 33,380
Property improvements 81 338
Disposals of property (21,581) --
Adjustment to liquidating basis (4,568) --
Balance at end of year $ 7,650 $ 33,718
Accumulated Depreciation
Balance at beginning of year $ 16,476 $ 15,282
Additions charged to expense 1,048 1,194
Dispositions of properties (12,649) --
Adjustment to liquidating basis (4,875) --
Balance at end of year $ -- $ 16,476
The aggregate cost of the real estate for Federal income tax purposes at
December 31, 1999 and 1998, respectively, is approximately $10,468,000 and
$32,613,000. The accumulated depreciation taken for Federal income tax purposes
at December 31, 1999 and 1998, respectively, is approximately $5,275,000 and
$16,987,000.
Note L - Income Taxes
The Partnership has received a ruling from the Internal Revenue Service that it
will be classified as a partnership for Federal income tax purposes.
Accordingly, no provision for income taxes is made in the financial statements
of the Partnership. Taxable income or loss of the Partnership is reported in the
income tax returns of its partners.
The following is a reconciliation of the Partnership's net income (loss) for
financial and Federal tax reporting purposes (in thousands):
Years Ended December 31,
1999 1998
Net income (loss) as reported $ 874 $ (790)
Excess of book over tax depreciation and
amortization (1,326) 23
Provision for doubtful accounts 13 (9)
Nondeductible employee meals 7 14
Other 179 16
Federal taxable net loss $ (253) $ (746)
Federal taxable loss per limited
partnership $ (4.22) $(12.43)
<PAGE>
The following is a reconciliation between the Partnership's reported amounts and
Federal tax basis of net assets and liabilities (in thousands):
1999
Net assets as reported in liquidation $ 5,342
Reserve for bad debt 36
Net book over tax fixed asset basis (1,921)
Other 814
Net assets - Federal tax basis $ 4,271
Note M - Distributions
In February 1998, the Partnership declared and paid a cash distribution from
operations to the limited partners in the amount of approximately $599,000.
There were no distributions declared in 1999.
Subsequent to December 31, 1999, the Partnership distributed approximately
$2,800,000 ($46.74 per limited partnership unit) to the limited partners
consisting of approximately $1,928,000 ($32.18 per limited partnership unit)
from the sale proceeds of Perimeter Square, the Green Valley Hotel, and the
Tucson Airport Hotel and approximately $872,000 ($14.56 per limited partnership
unit) of cash from operations.
Note N - Segment Reporting
Description of the types of products and services from which the reportable
segment derives its revenues:
The Partnership had two reportable segments: commercial and hotel properties.
The Partnership's commercial property segment consisted of two retail shopping
centers, one in Arizona and one in Georgia. The Partnership leases commercial
space to tenants under various lease terms. The shopping center located in
Arizona was sold to an unrelated party during 1999 (See "Note F - Sale of
Investment Property" for further information regarding the shopping center
sale). The Partnership's hotel property segment consisted of two hotels in
Arizona. The two hotel properties held by the Partnership were sold to unrelated
parties during 1999. Therefore, the hotel segment is reflected as discontinued
operations (see "Note G - Sale of Discontinued Operations" for further
discussion regarding the hotel sales).
Measurement of segment profit or loss:
The Partnership evaluates performance based on segment profit (loss) before
depreciation. The accounting policies of the reportable segments are the same as
those described in the summary of significant accounting policies.
Factors management used to identify the enterprise's reportable segment:
The Partnership's reportable segments consisted of investment properties that
offered different products and services. The reportable segments were each
managed separately because they provided distinct services with different types
of products and customers.
<PAGE>
Segment information for the years 1999 and 1998 is shown in the tables below (in
thousands). The "Other" column includes Partnership administration related items
and income and expense not allocated to the reportable segment.
<TABLE>
<CAPTION>
1999 Commercial Hotel Other Totals
(discontinued)
<S> <C> <C> <C> <C>
Rental operations $ 1,526 $ -- $ -- $ 1,526
Other income 22 -- 88 110
Interest expense (income) 896 -- (30) 866
Depreciation 413 -- -- 413
General and administrative
expense -- -- 222 222
Gain on sale of discontinued
operations -- 1,540 -- 1,540
Gain on sale of investment
property 64 -- -- 64
Loss from discontinued
operations -- (378) -- (378)
Extraordinary (loss) gain on
early extinguishment of debt (3) 27 -- 24
Segment (loss) profit (151) 1,189 (164) 874
Net assets in liquidation -- -- 5,342 5,342
Capital expenditures for
investment properties 78 3 -- 81
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
1998 Commercial Hotel Other Totals
(discontinued)
<S> <C> <C> <C> <C>
Rental operations $ 1,722 $ -- $ -- $ 1,722
Other income 27 -- 105 132
Interest expense 949 -- -- 949
Depreciation 434 -- -- 434
General and administrative
expense -- -- 221 221
Loss from discontinued
operations -- (461) -- (461)
Cumulative effect of adopting
standard -- (270) -- (270)
Segment loss (233) (731) (126) (1,090)
Total assets 9,356 9,830 1,782 20,968
Capital expenditures for
investment properties 1 337 -- 338
</TABLE>
Note O - Legal Proceedings
The Partnership is unaware of any pending or outstanding litigation that is not
of a routine nature in the ordinary course of business.
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Effective September 23, 1998, the Registrant dismissed its prior Independent
Auditors, Pannell Kerr Forster PC ("PKF") and retained as its new Independent
Auditors, KPMG LLP. PKF's Independent Auditor's Report on the Registrant's
consolidated financial statements for the calendar year ended December 31, 1997,
did not contain an adverse opinion or a disclaimer of opinion, and were not
qualified or modified as to uncertainty, audit scope or accounting principles.
The decision to change Independent Auditors was approved by the General
Partner's directors. During the calendar year ended 1997 and through September
23, 1998, there were no disagreements between the Registrant and PKF on any
matter of accounting principles or practices, financial statement disclosure, or
auditing scope or procedure which disagreements if not resolved to the
satisfaction of PKF, would have caused it to make references to the subject
matter of the disagreements in connection with its reports.
Effective September 23, 1998, the Registrant engaged KPMG LLP as its Independent
Auditors. During the year ended December 31, 1997 and through September 23,
1998, the Registrant did not consult KPMG LLP regarding any of the matters or
events set forth in Item 304(a)(2)(i) and (ii) of Regulation S-B.
Since September 23, 1998, there were no disagreements between the Registrant and
KPMP LLP on any matter of accounting principles or practices, financial
statement disclosure or auditing scope of procedures.
<PAGE>
PART III
Item 9. Directors and Executive Officers, Promoters and Control Persons,
Compliance with Section 16(a) of the Exchange Act
Drexel Burnham Lambert Real Estate Associates III (the "Registrant" or
"Partnership") does not have any officers or directors. Management and
administrative services are performed by DBL Properties Corporation ("DBL" or
the "General Partner") and its affiliates. The General Partner has general
responsibility and authority in all matters affecting the business of the
Partnership.
The names of the directors and executive officers of DBL as of December 31,
1999, their ages and nature of all positions presently held by them are set
forth below. There are no family relationships between or among any officers and
directors:
Name Age Position
Patrick J. Foye 42 Executive Vice President and Director
Martha L. Long 40 Senior Vice President and Controller
Patrick J. Foye has been Executive Vice President and Director of the General
Partner since October 1, 1998. Mr. Foye has served as Executive Vice
President and director of AIMCO since May 1998. Prior to joining AIMCO, Mr.
Foye was a partner in the law firm of Skadden, Arps, Slate, Meagher & Flom
LLP from 1989 to 1998 and was Managing Partner of the firm's Brussels,
Budapest and Moscow offices from 1992 through 1994. Mr. Foye is also Deputy
Chairman of the Long Island Power Authority and serves as a member of the New
York State Privatization Council. He received a B.A. from Fordham College
and a J.D. from Fordham University Law School.
Martha L. Long has been Senior Vice President and Controller of the General
Partner and AIMCO since October 1998, as a result of the acquisition of Insignia
Financial Group, Inc. From June 1994 until January 1997, she was the Controller
for Insignia, and was promoted to Senior Vice President - Finance and Controller
in January 1997, retaining that title until October 1998. From 1988 to June
1994, Ms. Long was Senior Vice President and Controller for The First Savings
Bank, FSB in Greenville, South Carolina.
Based solely upon a review of Forms 3 and 4 and amendments thereto furnished to
the Registrant under Rule 16a-3(e) during the Registrant's most recent fiscal
year and Form 5 and amendments thereto furnished to the Registrant with respect
to its most recent fiscal year, the Registrant is not aware of any director,
officer, beneficial owner of more than ten percent of the units of limited
partnership interest in the Registrant that failed to file on a timely basis, as
disclosed in the above Forms, reports required by Section 16(a) of the Exchange
Act during the most recent fiscal year or prior fiscal years.
Item 10. Executive Compensation
No directors and officers of the General Partner received any remuneration from
the Registrant.
<PAGE>
Item 11. Security Ownership of Certain Beneficial Owners and Management
Except as noted below, no person or entity was known by the Registrant to be the
beneficial owner of more than 5% of the Limited Partnership Units of the
Registrant as of December 31, 1999.
Number of Units Percentage
AIMCO Properties LP 4,391 7.33%
(an affiliate of AIMCO)
Cooper River Properties, LLC 3,110 5.19%
(an affiliate of AIMCO)
AIMCO Properties LP is indirectly ultimately controlled by AIMCO. Its business
address is 2000 South Colorado Boulevard, Denver, Colorado 80222.
Cooper River Properties, LLC is indirectly ultimately owned by AIMCO. Its
business address is 55 Beattie Place, Greenville, South Carolina 29602.
No director or officer of the General Partner owns any units.
Item 12. Certain Relationships and Related Transactions
The Registrant has no employees and is dependent on the General Partner and its
affiliates for the management and administration of all Partnership activities.
The Partnership Agreement provides for certain payments to affiliates for
services and as reimbursement of certain expenses incurred by affiliates on
behalf of the Partnership.
The following payments were made to the General Partner and affiliates during
the years ended December 31, 1999 and 1998:
1999 1998
(in thousands)
Property management fees $ -- $ 399
Reimbursement for services of affiliates 65 95
For the nine months ended September 30, 1998, affiliates of the General Partner
were entitled to receive varying percentages of gross receipts from all of the
Partnership's commercial and hotel properties for providing property management
services. The Partnership paid to such affiliates approximately $399,000 for the
nine months ended September 30, 1998. Effective October 1, 1998 these services
for the commercial and hotel properties were provided by an unrelated party.
An affiliate of the General Partner received reimbursements of accountable
administrative expenses amounting to approximately $65,000 and $95,000 for the
years ended December 31, 1999 and 1998, respectively.
At December 31, 1999, the Partnership owed an affiliate of the General Partner
approximately $174,000 for payroll expenses paid by such affiliate on behalf of
the hotel properties.
Included in other liabilities at December 31, 1999, is a $25,000 note payable to
the co-venturer in Shallowford. The note does not have any stipulated terms for
repayment and it accrues interest at 3% above prime. Interest expense on the
note amounted to approximately $3,000 in both 1999 and 1998. Total accrued
interest payable of approximately $21,000 is included in other liabilities at
December 31, 1999.
<PAGE>
Several tender offers were made by various parties, including affiliates of the
General Partner, during the years ended December 31, 1999 and 1998. As a result
of these tender offers, AIMCO and its affiliates currently own 7,501 limited
partnership units in the Partnership representing 12.52% of the outstanding
units. Under the Partnership Agreement, unitholders holding a majority of the
Units are entitled to take action with respect to a variety of matters. When
voting on matters, AIMCO would in all likelihood vote the Units it acquired in a
manner favorable to the interest of the General Partner because of their
affiliation with the General Partner.
Item 13. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit 27, Financial Data Schedule, is filed as an exhibit to this
report.
(b) Reports on Form 8-K filed during the fourth quarter of calendar year
1999:
None.
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES
III
By: DBL Properties Corporation
Its General Partner
By: /s/Patrick J. Foye
Patrick J. Foye
Executive Vice President
By: /s/Martha L. Long
Martha L. Long
Senior Vice President
and Controller
Date:
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
date indicated.
/s/Patrick J. Foye Executive Vice President Date:
Patrick J. Foye and Director
/s/Martha L. Long Senior Vice President Date:
Martha L. Long and Controller
<PAGE>
DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES III
INDEX TO EXHIBITS
Exhibit Number Description
2.1 Agreement and Plan of Merger, dated as of October 1, 1998, by and
between AIMCO and IPT; incorporated by reference to Current Report
on Form 8-K dated October 1, 1998.
3.1 Prospectus of the Partnership filed pursuant to rule 424(b), dated
December 30, 1983 is hereby incorporated herein by reference.
3.2 Supplement dated October 10, 1984 to Prospectus dated December 30,
1983 is hereby incorporated herein by reference.
3.3 Form of Agreement of Limited Partnership of the Partnership
reference is made to Exhibit A to the Prospectus.
3.4 Certificate of Limited Partnership of the Partnership, which
appears as Exhibit 3.2 to the Registration Statement is hereby
incorporated herein by the reference.
10.1 Agreement related to purchase by the Partnership of Wendover
Business Park Phase II in Greensboro, North Carolina, which
appears as Exhibit 2.1 to the Registration Statement of the
Partnership is hereby incorporated herein by reference.
10.2 Agreement related to purchase by the Partnership of an interest in
the Sheraton Poste Inn in Cherry Hill, New Jersey, which appears
as Exhibit 2.2 to the Registration Statement of the Partnership is
hereby incorporated herein by reference.
10.3 Agreement relating to purchase by the Partnership of Presidential
House at Sky Lake in North Miami Beach, Florida, for which a
Report on Form 8-K was filed with the Commission on November 5,
1984, is hereby incorporated herein by reference.
10.4 Agreement relating to purchase by the Partnership of an interest
in Table Mesa Shopping Center in Boulder, Colorado, for which a
Report on Form 8-K was filed with the Commission on May 21, 1985,
is hereby incorporated herein by reference.
10.5 Amendment No. 1, dated October 1, 1992, among the Partnership,
Coreal N.V., Inc. and Almanzil, Inc., to the Joint Venture
Agreements, dated April 4, 1984, between the Partnership and
Coreal relating to the Sheraton Poste Inn is incorporated by
reference to the Registrant's Annual Report on Form 10-KSB for
the fiscal year ended December 31, 1992.
10.6 Contracts related to refinancing of the debt of Wendover Business
Park Phase II were filed as Exhibit 10.6 to the report on Form
10-KSB for the fiscal year ended December 31, 1993, and are hereby
incorporated herein by reference:
(a) Mortgage note dated January 13, 1994 between Drexel Burnham
Lambert Real Estate Associates II, a New York limited
partnership, and United Family Life Insurance Company, a
Georgia corporation.
<PAGE>
(b) Deed of Trust and Security Agreement dated January 13, 1994
between Drexel Burnham Lambert Real Estate Associates II, a
New York limited partnership, and Stewart Title Guaranty
Company for the benefit of United Family Life Insurance
Company, a Georgia corporation.
(c) Assignment of Leases, Rents, Contracts, and Agreements dated
January 13, 1994 from Drexel Burnham Lambert Real Estate
Associates II, a New York limited partnership, to United
Family Life Insurance Company, a Georgia corporation.
(d) Hazardous Material Indemnification Agreement dated January
13, 1994 between Drexel Burnham Lambert Real Estate
Associates II, a New York limited partnership, and United
Family Life Insurance Company, a Georgia corporation.
(e) Escrow Agreement dated January 13, 1994 by and between United
Family Life Insurance Company, a Georgia corporation, Drexel
Burnham Lambert Real Estate Associates II, a New York limited
partnership, and Dickinson, Logan, Todd and Barber, Inc. (the
"Escrow Agent").
10.7 Purchase and Sale Contract between Registrant and P & H
Properties, L.L.C., an Oklahoma limited partnership, dated May 18,
1999, incorporated by reference to Current Report on Form 8-K
dated July 21, 1999.
10.8 First Amendment to Purchase and Sale Contract between Registrant
and P&H Properties, L.L.C., an Oklahoma limited partnership, dated
June 4, 1999, incorporated by reference to Current Report on Form
8-K dated July 21, 1999.
10.9 Second Amendment to Purchase and Sale Contract between Registrant
and P&H Properties, L.L.C., an Oklahoma limited partnership, dated
June 4, 1999, incorporated by reference to Current Report on Form
8-K dated July 21, 1999.
10.10 Purchase and Sale Contract between Registrant and Pacifica
Companies, a California Corporation, dated May 12, 1999,
incorporated by reference to Current Report on Form 8-K dated
December 1, 1999.
10.11 First Amendment to Purchase and Sale Contract between Registrant
and Pacifica Companies, a California Corporation, dated May 27,
1999, incorporated by reference to Current Report on Form 8-K
dated December 1, 1999.
10.12 Purchase and Sale Contract between DBL Airport Valley Limited
Partnership, an Arizona limited partnership and Jaykumar H.
Shah, M.D. dated June 24, 1999 relating to the sale of Tucson
Airport Hotel.
10.13 First Amendment to Purchase and Sale Contract between DBL
Airport Valley Limited Partnership, an Arizona limited
partnership and Jaykumar H. Shah, M.D. dated June 24, 1999
relating to the sale of Tucson Airport Hotel.
10.14 Second Amendment to Purchase and Sale Contract between DBL
Airport Valley Limited Partnership, an Arizona limited
partnership and Jaykumar H. Shah, M.D. dated September 29, 1999
relating to the sale of Tucson Airport Hotel.
10.15 Third Amendment to Purchase and Sale Contract between DBL
Airport Valley Limited Partnership, an Arizona limited
partnership and Jaykumar H. Shah, M.D. dated December 2, 1999
relating to the sale of Tucson Airport Hotel.
10.16 Fourth Amendment to Purchase and Sale Contract between DBL
Airport Valley Limited Partnership, an Arizona limited
partnership and Jaykumar H. Shah, M.D. dated December 10, 1999
relating to the sale of Tucson Airport Hotel.
16 Letter dated September 23, 1998 from the Registrant's former
independent accountant regarding its concurrence with the
statements made by the Registrant in Current Report on Form 8-K
dated September 30, 1998.
16.1 Letter dated October 21, 1998 from the Registrant's former
independent accountant regarding its concurrence with the
statements made by the Registrant in Amended Current Report on
Form 8-K/A dated October 26, 1998.
27 Financial Data Schedule.
99.1 Special Report/Acquisition Bulletin dated May 9, 1985 regarding
the Purchase by the Partnership of interests in Table Mesa
Shopping Center in Boulder, Colorado, and the 123 Office Building
in Tyson's Corner, Virginia is hereby incorporated herein by
reference.
99.2 Report on Form 8-K filed November 4, 1984 regarding the purchase
of Presidential House at Sky Lake in North Miami Beach, Florida is
hereby incorporated herein by reference.
99.3 Report on Form 8-K filed May 21, 1985 regarding the acquisition of
a 50% interest in Table Mesa Shopping Center in Boulder, Colorado
is hereby incorporated herein by reference.
99.4 On May 17, 1988, a report on Form 8-K was filed regarding the
refinancing of the four loans underlying the Presidential wrap
mortgage is hereby incorporated herein by reference.
99.5 On June 12, 1989, a report on Form 8-K was filed regarding the
modification of Table Mesa Promissory Note is hereby incorporated
herein by reference.
99.7 On October 11, 1989, a report on Form 8-K was filed regarding the
change in control of the parent company of the General Partner is
hereby incorporated herein by reference.
99.8 Second Note and Deed of Trust Revision Agreement dated December
3, 1990 regarding Table Mesa Shopping Center in Boulder,
Colorado.
99.9 Report on Form 8-K filed February 3, 1993 regarding the sale of
the outstanding stock of the General Partner is hereby
incorporated herein by reference.
99.10 Report on Form 8-K filed July 9, 1997, regarding the change in
control of the Partnership.
<PAGE>
Exhibit 10.12
PURCHASE AND SALE CONTRACT
BETWEEN
DBL AIRPORT VALLEY LIMITED PARTNERSHIP, an Arizona limited partnership
AS SELLER
AND
JAYKUMAR H. SHAH, M.D.
AS PURCHASER
relating to
Clarion Hotel-Airport
6801 S. Tucson Blvd., Tucson, Arizona
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1 DEFINED TERMS......................................................1
ARTICLE 2 PURCHASE AND SALE OF PROPERTY......................................4
ARTICLE 3 PURCHASE PRICE & DEPOSIT...........................................4
ARTICLE 4 FINANCING..........................................................5
ARTICLE 5 FEASBILITY PERIOD..................................................5
ARTICLE 6 TITLE..............................................................7
ARTICLE 7 CLOSING............................................................9
ARTICLE 8 REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER AND PURCHASER.13
ARTICLE 9 CONDITIONS PRECEDENT TO CLOSING...................................17
ARTICLE 10 BROKERAGE........................................................18
ARTICLE 11 POSSESSION.......................................................18
ARTICLE 12 DEFAULTS AND REMEDIES............................................18
ARTICLE 13 RISK OF LOSS OR CASUALTY.........................................19
ARTICLE 14 RATIFICATION.....................................................19
ARTICLE 15 EMINENT DOMAIN...................................................19
ARTICLE 16 MISCELLANEOUS....................................................19
<PAGE>
PURCHASE AND SALE CONTRACT
THIS PURCHASE AND SALE CONTRACT ("Purchase Contract") is entered into as
of June 24, 1999 (the "Effective Date") by and among DBL AIRPORT VALLEY LIMITED
PARTNERSHIP, an Arizona limited partnership ("Seller") and JAYKUMAR H. SHAH,
M.D., having a principal address at 536 Alta Vista, Monrovia, CA 91016
("Purchaser").
NOW, THEREFORE WITNESSETH: That for and in consideration of mutual
covenants and agreements herein after set forth, Seller and Purchaser hereby
agree as follows:
RECITALS
R-1...Seller holds legal title to a parcel of real estate located in Pima
County, Arizona, on which certain improvements have been constructed.
R-2...Purchaser desires to purchase and Seller has agreed to sell such land,
improvements and certain associated property, defined below as the "Property" on
the terms and conditions set forth below (which terms and conditions shall
control in the event of any conflict with these Recitals), such that on the
Closing Date (as defined in this Purchase Contract) the Property will be
conveyed to Purchaser;
R-3...Purchaser has agreed to pay to Seller the Purchase Price (as defined
herein) for the Property, and Seller has agreed to sell the Property to
Purchaser on the terms and conditions set forth below.
R-4...Purchaser has made such investigations regarding the Property, and
Purchaser's intended uses of each of the Property as Purchaser has deemed
necessary and desirable, has approved the same in all respects, subject only to
the representations, warranties and covenants set forth in this Purchase
Contract and does hereby agree to consummate the transactions contemplated by
this Purchase Contract as set forth below.
ARTICLE 1
DEFINED TERMS
1.1 Defined Terms. Terms with initial capital letters in this Purchase
Contract shall have the meanings set forth in this Article 1 below.
1.1.1 "Assignment" shall have the meaning ascribed thereto in Section 7.2.1.3.
1.1.2 "Bill of Sale" shall have the meaning ascribed thereto in Section
7.2.1.2.
1.1.3 "Broker" shall have the meaning ascribed thereto in Section 10.1. 1.1.4
"Business Day" means any day other than a Saturday or Sunday or Federal holiday
or legal holiday in Pima County, Arizona.
1.1.5 "Closing" means the consummation of the purchase and sale and related
transactions contemplated by this Purchase Contract in accordance with the terms
and conditions of this Purchase Contract.
1.1.6 "Closing Date" means a date which is on or after September 15, 1999, but
no later than September 17, 1999. 1.1.7 "Closing Statement" shall have the
meaning ascribed thereto in Section 7.2.1.4.
1.1.8 "Commercial Lease(s)" means the interest of Seller in and to all leases,
subleases and other occupancy agreements, whether or not of record, which
provide for the use or occupancy of space or facilities on or relating to the
Property and which are in force as of the Effective Date. There are no
Commercial Leases.
1.1.9 "Consultants" shall have the meaning ascribed thereto in Section 5.1.
1.1.10 "Deed" shall have the meaning ascribed thereto in Section 7.2.1.1.
1.1.11 "Deposit" shall have the meaning ascribed thereto in Section 3.1.1.
1.1.12 "Escrow Agent" shall have the meaning ascribed thereto in Section
3.1.1.
1.1.13 "Purchase Contract" means this Purchase and Sale Contract by and between
Seller and Purchaser. 1.1.14 "Excluded Permits" means those Permits which, under
applicable law, are nontransferable.
1.1.15 "Feasibility Period" shall have the meaning ascribed thereto in Section
5.1. 1.1.16 "Fixtures and Tangible Personal Property" means all fixtures,
furniture, furnishings, fittings, equipment, machinery, apparatus, appliances,
inventory, automobiles and other articles of personal property now located on
the Land or in the Improvements as of the date of this Purchase Contract and
used or usable in connection with any present or future occupation or operation
of all or any part of the Property. The term "Fixtures and Tangible Personal
Property" does not include (i) equipment leased by Seller and the interest of
Seller in any equipment provided to the Property for use, but not owned by
Seller, or (ii) property owned or leased by Tenants and guests, employees or
other persons furnishing goods or services to the Property, or (iii) property
and equipment owned by Seller, which in the ordinary course of business of the
Property is not used exclusively for the business, operation or management of
the Property. 1.1.17 "Franchise Agreement" means that certain Franchise
Agreement, dated July 10, 1991, by and between Choice Hotels International, Inc.
("Choice Hotels") and Seller.
1.1.18 "Land" means all of that certain tract of land located in Pima County,
Arizona, commonly known as 6801 South Tucson Boulevard, Tucson, Arizona,
containing approximately 7.97 acres and more particularly described in Exhibit
1.1.18 attached hereto and made a part hereof and all rights, privileges and
appurtenances pertaining thereto.
1.1.19 "Like Kind Exchange" and "Like Kind Exchange Property" shall have the
meaning ascribed thereto in Section 16.18. 1.1.20 "Liquor License" means that
certain liquor license issued by the Arizona Department of Liquor Licenses and
Control, relating to the Property. 1.1.21 "Notice" shall have the meaning
ascribed thereto in Section 16.6. 1.1.22 "Property" means the Land and
Improvements described in the Recitals and all rights of Seller relating to the
Land and the Improvements, including without limitation, any rights, title and
interest of Seller, if any, in and to (i) any strips and gores adjacent to the
Land and any land lying in the bed of any street, road, or avenue opened or
proposed, in front of or adjoining the Land, to the center line thereof; (ii)
any unpaid award for any taking by condemnation or any damage to the Property by
reason of a change of grade of any street or highway; (iii) all of the
easements, rights, privileges, and appurtenances belonging or in any way
appertaining to the Property; together with all Fixtures and Tangible Personal
Property, the right, if any and only to the extent transferable, of Seller
issued to Property Contracts and Commercial Leases, Permits other than Excluded
Permits and the Miscellaneous Property Assets.
1.1.23 "Property Contracts" means all purchase orders, maintenance, service, or
utility contracts and similar contracts, which relate to the ownership,
maintenance, construction or repair and/or operation of the Property and which
are not cancelable on ninety (90) days' or shorter Notice, except Commercial
Leases, including, without limitation, those contracts described on Exhibit
1.1.23.
1.1.24 "Proration Period" shall have the meaning ascribed thereto in Section
7.1.4. 1.1.25 "Improvements" means all buildings and improvements located on the
Land taken "as is" containing approximately 95,164 gross square feet of building
area.
1.1.26 "Miscellaneous Property Assets" means all contract rights, leases,
concessions, warranties, plans, drawings and other items of intangible personal
property relating to the ownership or operation of the Property owned by Seller
and assignable without consent of any third party required for transfer,
excluding, however, (i) receivables, (ii) Property Contracts, (iii) Commercial
Leases, (iv) Permits, (v) cash or other funds, whether in petty cash or house
"banks," or on deposit in bank accounts or in transit for deposit, (vi) refunds,
rebates or other claims, or any interest thereon, for periods or events
occurring prior to the Closing Date, (vii) utility and similar deposits, (viii)
insurance or other prepaid Items or (ix) books and records, except to the extent
that Seller receives a credit on the Closing Statement for any such item.
1.1.27 "Permits" means all licenses and permits granted by governmental
authorities having jurisdiction over the Property in respect of the matter to
which the applicable license or permit applies and owned by Seller or used in or
relating to the ownership, occupancy or operation of the Property or any part
thereof not subject to a Commercial Lease, including without limitation, the
Liquor License.
1.1.28 "Permitted Exceptions" means those exceptions or conditions permitted to
encumber the title to the Property in accordance with the provisions of Section
6.2.
1.1.29 "Purchase Price" means the total consideration to be paid by Purchaser to
Seller for the purchase of the Property as described in Section 3.1.
1.1.30 "Tenant" means any person or entity entitled to occupy any portion of the
Property under a Commercial Lease. 1.1.31 "Title Commitment" or "Title
Commitments" shall have the meaning ascribed thereto in Section 6.1.
1.1.32 "Title Company" shall have the meaning ascribed thereto in Section
3.1.1.
1.1.33 "Title Insurer" shall have the meaning set forth in Section 6.1.
ARTICLE 2
PURCHASE AND SALE OF PROPERTY
2.1 Purchase and Sale. Seller agrees to sell and convey the Property to
Purchaser and Purchaser agrees to purchase the Property from Seller, in
accordance with the terms and conditions set forth in this Purchase Contract.
ARTICLE 3
PURCHASE PRICE & DEPOSIT
3.1 Purchase Price. The total purchase price ("Purchase Price") for the Property
shall be FIVE MILLION EIGHT HUNDRED THOUSAND DOLLARS ($5,800,000.00), which
shall be paid by Purchaser, as follows: 3.1.1 Deposit. On the date hereof,
Purchaser shall deliver to Fidelity National Title Insurance Agency ("Escrow
Agent" or the "Title Company") a deposit in the sum of One Hundred Thousand
Dollars ($100,000.00) in cash (the "Deposit"). Purchaser and Seller each approve
the form of escrow instructions attached as Exhibit 3.1.1.
3.1.2 Investment of Deposit. The Escrow Agent shall hold the Deposit and make
delivery of the Deposit to the party entitled thereto under the terms hereof.
Escrow Agent shall invest the Deposit in such short-term, high-grade securities,
interest-bearing bank accounts, money market funds or accounts, bank
certificates of deposit or bank repurchase agreements as Escrow Agent, in its
discretion, deems suitable, (provided that Escrow Agent shall invest the Deposit
as jointly directed by Seller and Purchaser should Seller and Purchaser each in
their respective sole discretion determine to issue such joint investment
instructions to the Escrow Agent) and all interest and income thereon shall
become part of the Deposit and shall be remitted to the party entitled to the
Deposit, as set forth below.
3.1.3 Application of Deposit. If the sale of the Property is closed by the
Closing Date, monies held as the Deposit shall be applied to the Purchase Price
(and paid over to the Seller) on the Closing Date. One-half (1/2) of the
Deposit, which is FIFTY THOUSAND DOLLARS ($50,000.00) (the "Non-Refundable
Deposit"), shall be non-refundable to Purchaser for any reason as of the date of
this Agreement. One-half (1/2) of the Deposit, which is FIFTY THOUSAND DOLLARS
($50,000.00) (the "Refundable Deposit"), shall be refundable to Purchaser until
expiration of the Feasibility Period, as provided herein. If the sale of the
Property is not closed by the Closing Date owing to failure of satisfaction of a
condition precedent to Purchaser's obligations, the Refundable Deposit shall be
returned and refunded to Purchaser, and neither party shall have any further
liability hereunder, subject to and except for Purchaser's liability under
Section 5.3.
ARTICLE 4
FINANCING
4.1 Financing. Purchaser assumes full responsibility to expeditiously and
diligently initiate and pursue all steps necessary to obtain the funds required
for settlement, and acquisition of such funds shall not be a condition to
Purchaser's obligations under this Purchase Contract.
ARTICLE 5
FEASIBILITY PERIOD
5.1 Feasibility Period. Subject to the terms of section 5.3 below, for thirty
(30) calendar days following the Effective Date (the "Feasibility Period"),
Purchaser, and its agents, contractors, engineers, surveyors, attorneys, and
employees ("Consultants") shall have the right from time to time to enter onto
the Property and to investigate the Property: 5.1.1 To conduct and make any and
all customary studies, tests, examinations and inspections, or investigations of
or concerning the Property (including without limitation, engineering and
feasibility studies, evaluation of drainage and flood plain, soil tests for
bearing capacity and percolation and surveys, including topographical surveys).
5.1.2 To confirm any and all matters which Purchaser may reasonably desire to
confirm with respect to the Property. 5.1.3 To ascertain and confirm the
suitability of the property for Purchaser's intended use of the Property.
5.1.4 To investigate the feasibility, prerequisites and costs associated with
transfer of the Liquor License to Purchaser at Closing, including without
limitation, investigation of acquisition of a temporary liquor license operating
permit for the Property.
5.2 Termination. Should the results of any of the matters referred to in Section
5.1 above appear unsatisfactory to Purchaser for any reason, then Purchaser
shall have the right to terminate this Purchase Contract by giving Notice (as
defined herein) to that effect to Seller and Escrow Agent on or before 5:00 p.m.
EST on the date of expiration of the Feasibility Period. If Purchaser exercises
such right to terminate, this Purchase Contract shall terminate and be of no
further force and effect, subject to and except for Purchaser's liability under
Section 5.3, and Escrow Agent shall return the Refundable Deposit to Purchaser
and deliver the Non-Refundable Deposit to Seller. If Purchaser fails to provide
Seller with Notice of cancellation prior to the end of the Feasibility Period,
this Purchase Contract shall remain in full force and effect and Purchaser's
obligation to purchase the Property shall be non-contingent and unconditional
except only for satisfaction of the conditions expressly stated in this ARTICLE
5 and in ARTICLE 9.
5.3 Indemnity; Insurance. Purchaser shall indemnify and hold Seller harmless for
any actions taken by Purchaser and the Consultants on the Property. Purchaser
shall indemnify, defend (with attorneys selected by Seller) and hold Seller
harmless from any and all claims, damages, costs and liability which may arise
due to such entries, surveys, tests, investigations and the like. Seller shall
have the right, without limitation, to disapprove any and all entries, surveys,
tests, investigations and the like that in their reasonable judgment could
result in any injury to the Property or breach of any agreement, or expose
Seller to any liability, costs, liens or violations of applicable law, or
otherwise adversely affect the Property or Seller's interest therein. No consent
by the Seller to any such activity shall be deemed to constitute a waiver by
Seller or assumption of liability or risk by Seller. Purchaser hereby agrees to
restore the Property to the same condition existing immediately prior to
Purchaser's exercise of its rights pursuant to this ARTICLE 5 at Purchaser's
sole cost and expense. Purchaser shall maintain casualty insurance and
comprehensive public liability insurance with broad form contractual and
personal injury liability endorsements with respect to the Property and
Purchaser's activities carried on therein, in amounts (including deductible
amounts) and with such insurance carriers as shall be approved by Seller and
naming Seller and its affiliates as loss payees or additional insureds (at the
option of Seller), with endorsements acceptable to Seller, including a waiver of
defenses of the insurer based on the actions or inaction of Purchaser. Such
liability insurance shall provide coverages of not less than $1,000,000.00 for
injury or death to any one person and $3,000,000.00 for injury or death to more
than one person and $500,000.00 with respect to property damage, by water or
otherwise). The provisions of this section shall survive the Closing or
termination of this Purchase Contract.
5.4 No Liens; Information. Purchaser shall not permit any mechanic's or
materialman's liens or any other liens to attach to the Property by reason of
the performance of any work or the purchase of any materials by Purchaser or any
other party in connection with any studies or tests conducted by or for
Purchaser. Purchaser shall give written notice to Seller a reasonable time prior
to entry onto the Property and shall permit Seller to have a representative
present during all investigations and inspections conducted with respect to the
Property. Purchaser shall take all reasonable actions and implement all
protections necessary to ensure that all actions taken in connection with the
investigations and inspections of the Property, and all equipment, materials and
substances generated, used or brought onto the Property pose no material threat
to the safety of persons or the environment and cause no damage to the Property
or other property of Seller or other persons. All information made available by
Seller to Purchaser in accordance with this Purchase Contract or obtained by
Purchaser in the course of its investigations shall be treated as confidential
information by Purchaser, and, prior to the purchase of the Property by
Purchaser, Purchaser shall use its best efforts to prevent its agents and
employees from divulging such information to any unrelated third parties except
as reasonably necessary to third parties engaged by Purchaser for the limited
purpose of analyzing and investigating such information for the purpose of
consummating the transaction contemplated by this Purchase Contract, including
Purchaser's attorneys and representatives, prospective lenders and engineers.
ARTICLE 6
TITLE
6.1 Title Commitment. Purchaser and Seller acknowledge that, as of the Effective
Date, Purchaser has received a commitment for title insurance for the Property
in an amount equal to the Purchase Price ("Title Commitment,") issued by
Fidelity National Title Insurance Company ("Title Insurer") for a standard
coverage owner's title insurance policy, together with legible copies of all
instruments identified as exceptions therein. Seller agrees that it shall be
solely responsible for payment of all costs relating to procurement of the Title
Commitment and a standard coverage owner's policy of title insurance purchased
by Seller on behalf of Purchaser at the Closing. 6.2 Permitted Exceptions.
Purchaser agrees to accept title to the Property and agrees that conveyance by
the Deed (as defined herein) shall be subject to the following, all of which
shall be deemed "Permitted Exceptions," and Purchaser agrees to accept the Deed
and title to the Property subject thereto: 6.2.1 All exceptions shown in the
Title Commitment (other than mechanics' liens and taxes due and payable in
respect of the period preceding Closing); and 6.2.2 Such exceptions and matters
as the Title Company shall be willing to omit as exceptions to coverage; and
6.2.3 All Commercial Leases and any other occupancy, residency, lease, tenancy
and similar agreements entered into in the ordinary course of business; and
6.2.4 All Property Contracts and any other existing contracts created in the
ordinary course of business by Seller, which are not identified for termination
by Purchaser during the Feasibility Period; and 6.2.5 Real estate and property
taxes to the extent not due and payable; and 6.2.6 Defects and exceptions which
do not materially and adversely affect the condition of title to the Property
and its use as of the Effective Date. 6.3 Liens to be Paid at Closing. The
existence of other mortgages, liens, or encumbrances shall not be objections to
title, provided that properly executed instruments in recordable form necessary
to satisfy and remove the same of record are delivered to the Purchaser at
Closing or, in the alternative, with respect to any mortgage or deed of trust
liens, that payoff letters from the holder of the mortgage or deed of trust
liens shall have been delivered to and accepted by the Title Insurer (sufficient
to remove the same from the policy issued at Closing), together in either case,
with recording and/or filing fees.
6.4 Property Taxes to be Paid at Closing. Unpaid liens for any and all taxes,
charges and regular and special assessments shall not be objections to title,
but shall be prorated between Seller and Purchaser as of the Closing Date,
subject to the provisions for apportionment of taxes contained herein. 6.5
Franchise Taxes to be Paid at Closing. Unpaid franchise or business corporation
taxes of any corporations in the chain of title shall not be an objection to
title, provided that the Title Insurer agrees to insure against collection out
of the Property or otherwise against Purchaser or its affiliates.
6.6 Financing Statements to be Released at Closing. If on the Closing Date there
are conditional bills of sale or Uniform Commercial Code financing statements
that were filed on a day more than six (6) years prior to such Closing, and such
financing statements have not been extended by the filing of UCC-2 continuation
statements within the past six (6) years prior to such Closing, such financing
statements shall not be deemed to be an objection to title.
6.7 Title at Closing. If on the Closing Date, the state of title is other than
in accordance with the requirements set forth in this Purchase Contract or if
any condition to be fulfilled by Seller shall not be satisfied, Purchaser shall
provide Seller with Notice thereof at such time, or such title objection or
unfulfilled condition shall be deemed waived by Purchaser in which case
Purchaser and Seller shall proceed to consummate the Closing on the Closing
Date.
6.7.1. If Purchaser timely gives Seller such Notice, Seller shall have thirty
(30) days to cure, at its option, such objection or unfulfilled condition.
6.7.2 If during the period of cure Seller is unable or unwilling, in its sole
discretion or opinion, to eliminate such title objection or cause a title
insurance company to insure over such matter or satisfy such unfulfilled
condition, Seller shall give Purchaser Notice thereof, and if Purchaser does not
waive such objection by Notice delivered to Seller and the title company issuing
the Title Commitment on or before seven (7) calendar days following the date
Seller gives such Notice, then this Purchase Contract shall automatically
terminate, in which event the parties hereto shall have no further obligations
to each other.
6.8 No Additional Liens. Seller covenants that it will not voluntarily create or
cause any lien or encumbrance (other than Commercial Leases and Property
Contracts in the ordinary course of business) to attach to the Property between
the date of this Purchase Contract and the Closing Date; any such monetary lien
or encumbrance so attaching by voluntary act of Seller shall be discharged by
the Seller at or prior to Closing on the Closing Date or any postponed Closing
Date. Except as expressly provided above, Seller shall not be required to
undertake efforts to remove any other lien, encumbrance, security interest,
exception, objection or other matter, to make any expenditure of money or
institute litigation or any other judicial or administrative proceeding, and
Seller may elect not to discharge the same. 6.9 No Objections to Permitted
Encumbrances. Anything to the contrary notwithstanding, Purchaser shall not have
any right to terminate this Purchase Contract or object to any lien,
encumbrance, exception or other matter that is a Permitted Exception or that has
been waived or deemed to have been waived by Purchaser.
6.10 Survey. Neither party shall be required to obtain a survey for the
Property. If Purchaser's lender shall require a survey of the Property,
Purchaser shall obtain such survey at Purchaser's sole cost and expense.
ARTICLE 7
CLOSING
7.1 Dates, Places Of Closing, Prorations, and Delinquent Rent. 7.1.1 Place;
Closing Date. The Closing shall take place in the offices of Escrow Agent at
Escrow Agent's office in Tucson, Arizona, or such other place as the parties
shall mutually agree upon on or before the Closing Date. Seller and Purchaser
agree that either party may deliver documents by overnight air courier or other
means so that such party need not be physically present at the Closing.
7.1.2 Extension. The Closing Date may be extended without penalty at the sole
option of Seller to a date not later than ninety (90) days following the Closing
Date specified above, in order to allow Seller additional time to satisfy a
condition to be satisfied by Seller, or such later date as is mutually
acceptable to Seller and Purchaser.
7.1.3. Prorations. At Closing, the Escrow Agent shall make appropriate
prorations, credits, debits and adjustments in accordance with Exhibit 7.1.3 as
of the Closing Date, with Seller generally being entitled to or charged for, as
the case may be, revenues and expenses relating to the Property attributable to
the period up to the Closing Date (and further credited for any amounts paid by
Seller attributable to the period on or after the Closing Date), and Purchaser
being entitled to or responsible for, as the case may be, all of same
attributable to the period on and after the Closing Date. The proration shall be
final and unadjustable except as provided in the following paragraph, and the
provisions of this Section 7.1.3. shall apply during the Proration Period (as
defined below).
7.1.4. Proration Period. If any of the items subject to proration hereunder
cannot be prorated at the Closing because the information necessary to compute
such proration is unavailable, or if any errors or omissions in computing
prorations at the Closing are discovered subsequent to the Closing, then such
item shall be reapportioned and such errors and omissions corrected as soon as
practicable after the Closing Date and the proper party reimbursed, which
obligation shall survive the Closing for a period (the "Proration Period") from
the Closing Date until three (3) months after the Closing Date. Neither party
hereto shall have the right to require a recomputation of a Closing proration or
a correction of an error or omission in a Closing proration unless within the
Proration Period one of the parties hereto (i) has obtained the previously
unavailable information or has discovered the error or omission, and (ii) has
given Notice thereof to the other party together with a copy of its good faith
recomputation of the proration and copies of all substantiating information used
in such recomputation. The failure of a party to obtain any previously
unavailable information or discover an error or omission with respect to an item
subject to proration hereunder and to give Notice thereof as provided above
within the Proration Period shall be deemed a waiver of its right to cause a
recomputation or a correction of an error or omission with respect to such item
after the Closing Date. Any Rents that have accrued, but have not yet been paid
shall be prorated in accordance with estimates based upon the prior years'
information (or reasonable estimates of Seller if no such prior years'
information is available), and shall be subsequently readjusted and
reapportioned upon receipt. Purchaser shall pay Seller for rents and other
receivables and revenues that have accrued, but are not yet due and payable, at
Closing.
7.2 Items To Be Delivered Prior To Or At Closing.
7.2.1 Seller. At Closing, Seller shall deliver to Purchaser, each of the
following items, as applicable:
7.2.1.1 Deed. A special warranty deed ("Deed") in the form attached as Exhibit
7.2.1.1 to Purchaser. The acceptance of the Deed at Closing, shall be deemed to
be full performance of, and discharge of, every agreement and obligation on
Seller's part to be performed under this Purchase Contract, except for those
that this Purchase Contract specifically provides shall survive Closing.
7.2.1.2 Bill of Sale. A "Bill of Sale" without recourse or warranty in the form
attached as Exhibit 7.2.1.2 covering all Property Contracts, Commercial Leases,
Permits (other than Excluded Permits) and Fixtures and Tangible Personal
Property. Purchaser shall execute the Bill of Sale so as to effect an assumption
by Purchaser, including, without limitation, of Seller's obligations thereunder.
7.2.1.3 Assignment An assignment and assumption agreement ("Assignment") in the
form attached as Exhibit 7.2.1.3, transferring without recourse or warranty all
of Seller's right, title and interest in and to the Miscellaneous Property
Assets to Purchaser, subject to any consents of third parties required for
transfer. Purchaser shall assume Seller's obligations thereunder.
7.2.1.4 Closing Statement. A closing settlement statement executed by
Seller ("Closing Statement").
7.2.1.5 Seller's Title Affidavit. An affidavit in customary form reasonably
acceptable to Seller to enable Title Insurer to delete the standard exceptions
relating to mechanics liens and parties in possession from the title insurance
policy to be issued at Closing, provided that such affidavit does not subject
Seller to any greater liability or impose any additional obligations on Seller,
other than as set forth in this Purchase Contract.
7.2.1.6 Non-Foreign Certificate. A certification of Seller's non-foreign status
pursuant to Section 1445 of the Internal Revenue Code of 1986, as amended.
7.2.1.7 Certificate of Title. Certificate of titles transferring to Purchaser
good title to all automobiles and trucks comprising the Fixtures and Tangible
Personal Property.
7.2.1.8 Baggage. A list of all baggage checked or left in the care of
Seller at 7:00 a.m. of the Closing Date.
7.2.1.9 Employee List. A list of all on-site employees of Seller as set
forth in Section 7.5.
7.2.1.10Delivery of Other Items. Except for the items expressly listed above to
be delivered at Closing, delivery of any other required items shall be deemed
made by Seller to Purchaser, if Seller leaves such documents at the Property in
their customary place of storage or in the custody of Purchaser's
representatives.
7.2.2 Purchaser. At Closing, Purchaser shall deliver to Seller the following
items with respect to each Property being conveyed or transferred by merger at
such Closing:
7.2.2.1 Purchase Price. The full Purchase Price as required by ARTICLE 3 hereof
plus or minus the adjustments or prorations required by this Purchase Contract.
If at Closing there are any liens or encumbrances on the Property that Seller is
obligated or elects to pay and discharge, Seller may use any portion of the
Purchase Price to satisfy the same, provided that Seller shall have delivered to
Purchaser, or to Purchaser's designee, on such Closing instruments in recordable
form sufficient to satisfy such liens and encumbrances of record (or, as to any
mortgages or deeds of trust, appropriate payoff letters, acceptable to the Title
Insurer), together with the cost of recording or filing such instruments.
Purchaser, if request is made within a reasonable time prior to Closing, agrees
to provide at Closing separate certified or cashier's checks as requested,
aggregating not more than the amount of the balance of the portion of Purchase
Price, to facilitate the satisfaction of any such liens or encumbrances. The
existence of any such liens or encumbrances shall not be deemed objections to
title if Seller shall comply with the foregoing requirements.
7.2.2.2 Closing Statement. The Closing Statement executed by Purchaser.
7.2.2.3 Bill of Sale. An executed counterpart of the Bill of Sale.
7.2.2.4 Assignment. An executed counterpart of the Assignment.
7.2.2.5 Hart-Scott-Rodino Compliance. Written evidence of Purchaser's
compliance with Hart-Scott-Rodino Act requirements or of the non-applicability
thereof to the transactions contemplated by this Purchase Contract.
7.2.2.6 Other Items. Such other instruments, documents or certificates as
are required to be delivered by Purchaser to Seller in accordance with any of
the other provisions of this Purchase Contract.
7.3 Franchise Agreement. Purchaser agrees to cancel the Franchise Agreement
as of September 15, 1999.
7.4 Liquor License. Purchaser shall be solely responsible for obtaining any
consents and payment of any fees relating to transfer of the Liquor License
to Purchaser at Closing, and Seller shall reasonably cooperate with Purchaser
regarding such transfer.
7.5 Termination of Employees. Seller shall terminate all employees of Seller
(salaried, hourly or otherwise) who are employed in connection with the
operation or management of the Property effective as of 7:00 a.m. on the Closing
Date, and Seller shall be solely responsible for any amount payable to or in
respect of any such employees and all other claims relating to such employees,
including in each case any employees who are hired by Purchaser, and including
without limitation all wages, salaries, gratuities and accrued benefits, accrued
vacation and fringe benefits, health benefits and claims, severance obligations,
taxes and all other liabilities associated with the employment of any employee
to (but not including) the Closing Date. Purchaser shall have the right after
the Effective Date to contact and interview current employees of Seller and to
review all files in the possession of Seller relating to such employees.
Purchaser intends to employ most, if not all, of those on-site salaried
employees of Seller as well as the on-site hourly employees of Seller listed on
a schedule thereof to be prepared by Seller and delivered to Purchaser on the
Closing Date, all of whom will be released from the employ of Seller at (or
prior to) Closing. Purchaser agrees to notify Seller prior to expiration of the
Feasibility Period of any such listed employees to whom Purchaser does not
intend to offer employment so that Seller may comply with any obligations
pursuant to the Worker Adjustment and Retraining Notification Act, 29 U.S.C.
Section 2101 et seq. ("WARN") or under the Consolidated Omnibus Budget
Reconciliation Act of 1985, Pub. L. No. 99-272, 100 Stat. 82 ("COBRA"). Each
party shall assume responsibilities required of such party under WARN or COBRA,
and each party shall indemnify and hold the other party harmless for liability
resulting from WARN or COBRA directly or indirectly resulting from the
transactions contemplated by this Agreement or by a such party's actions. This
Section 7.5 shall survive Closing and the delivery of the Deed and the other
conveyance documents.
7.6 Safe Deposit Boxes. Seller shall, on or before the seventh (7th) day before
the Closing Date, deliver written notices to any persons who have safe deposit
boxes at the Property as of the Closing Date advising of the sale of the
Property to Purchaser and requesting the removal and verification of the
contents on or prior to the Closing Date. Purchaser may have a representative on
the Property during such removal of the contents of the safe deposit boxes and
participating in the verification thereof. 7.7 Assumption of Liabilities.
Purchaser assumes any and all liability for the following items located on the
Property as of the Closing Date: personal property of guests of the Property,
the contents of safe deposit boxes and baggage.
ARTICLE 8
REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER AND PURCHASER
8.1 Representations And Warranties Of Seller.
8.1.1 Representations and Warranties. For the purpose of inducing Purchaser to
enter into this Purchase Contract and to consummate the sale and purchase of the
Property in accordance herewith, Seller represents and warrants to Purchaser the
following as of the Effective Date and as of the Closing Date:
8.1.1.1 Seller is a lawfully and duly organized limited partnership, in good
standing under the laws of the state of Arizona; and has or at Closing shall
have the power and authority to sell and convey the Property and to execute the
documents to be executed by Seller and prior to Closing will have taken as
applicable, all corporate, partnership, limited liability company or equivalent
entity actions required for the execution and delivery of this Purchase Contract
and the consummation of the transactions contemplated by this Purchase Contract.
The compliance with or fulfillment of the terms and conditions hereof will not
conflict with, or result in a breach of, the terms, conditions or provisions of,
or constitute a default under, any purchase contract to which Seller is a party
or by which Seller is otherwise bound. Seller has not made any other purchase
contract for the sale of, or given any other person the right to purchase, all
or any part of any of the Property;
8.1.1.2 Seller owns fee title to the Property, subject only to the Permitted
Exceptions;
8.1.1.3 There are no adverse or other parties in possession of the Property,
except for occupants, guests and Tenants.
8.1.1.4 The joinder of no person or entity other than Seller is necessary to
convey the Property fully and completely to Purchaser at Closing, or to fulfill
Seller's obligations hereunder, and Seller has all necessary right and authority
to convey and assign to Purchaser all contract rights and warranties required to
be conveyed and assigned to Purchaser hereunder;
8.1.1.5 Purchaser has no duty to collect withholding taxes for Seller pursuant
to the Foreign Investors Real Property Tax Act of 1980, as amended;
8.1.1.6 To Seller's knowledge, there are no actions, proceedings, litigation or
governmental investigations or condemnation actions either pending or threatened
against the Property;
8.1.1.7 Seller has no knowledge of any claims for labor performed, materials
furnished or services rendered in connection with constructing, improving or
repairing any of the Property, caused by Seller and which remain unpaid beyond
the date for which payment was due and in respect of which liens may or could be
filed against any of the Property; and
8.1.1.8 Seller discloses that the Seller has not yet provided certain
information relating to Seller's acquisition of the Property and the Liquor
License to the Arizona Department of Liquor Licenses and Control. Seller makes
no representation or warranty as to the validity, status or transferability of
the Liquor License.
8.1.2 As Is Purchase. Except for the representations and warranties expressly
set forth above in Section 8.1.1, the Property is expressly purchased and sold
"AS IS," "WHERE IS," and "WITH ALL FAULTS." The Purchase Price and the terms and
conditions set forth herein are the result of arm's-length bargaining between
entities familiar with transactions of this kind, and said price, terms and
conditions reflect the fact that Purchaser shall have the benefit of, and is
relying upon, no information provided by Seller, and Purchaser is not relying on
any statements, representations or warranties, express or implied, made by or
enforceable directly against Seller, including, without limitation, any relating
to the value of the Property, the physical or environmental condition of the
Property, the state, federal, county or local law, ordinance, order, permit or
suitability, compliance or lack of compliance of the Property with any
regulation, or any other attribute or matter of or relating to the Property
(other than any covenants of title contained in the deeds conveying the Property
and the representations set forth above). Purchaser represents and warrants that
as of the date hereof and as of the Closing Date, it has and shall have reviewed
and conducted such independent analyses, studies, reports, investigations and
inspections as it deems appropriate in connection with the Property. If Seller
provides or has provided any documents, opinions or work product of consultants,
surveyors, architects, engineers, title companies, governmental authorities or
any other person or entity with respect to the Property, Purchaser and Seller
agree that Seller has done so or shall do so only for the convenience of both
parties, Purchaser shall not rely thereon and the reliance by Purchaser upon any
such documents, opinions or work product shall not create or give rise to any
liability of or against Seller, Seller's partners or affiliates or any of their
respective partners, officers, directors, participants, employees, contractors,
attorneys, consultants, representatives, agents, successors, assigns or
predecessors-in-interest. Purchaser shall rely only upon any title insurance
obtained by Purchaser with respect to title to the Property. Purchaser
acknowledges and agrees that no representation has been made and no
responsibility is assumed by Seller with respect to current and future
applicable zoning or building code requirements or the compliance of the
Property with any other laws, rules, ordinances or regulations, the financial
earning capacity or expense history of the Property, the continuation of
contracts, continued occupancy levels of the Property, or any part thereof, or
the continued occupancy by Tenants or, without limiting any of the foregoing,
occupancy at Closing. Prior to Closing, Seller shall have the right, but not the
obligation, to enforce its rights against any and all Property occupants, guests
or Tenants. Purchaser agrees that the departure or removal, prior to Closing, of
any of such guests, occupants or Tenants shall not be the basis for, nor shall
it give rise to, any claim on the part of Purchaser, nor shall it affect the
obligations of Purchaser under this Purchase Contract in any manner whatsoever;
and Purchaser shall close the transaction described herein and accept delivery
of the Deed with or without such tenants in possession and without any allowance
or reduction in the Purchase Price. Purchaser hereby releases Seller from any
and all claims and liabilities relating to the foregoing matters, except as
provided in Section 8.1.3 below. 8.1.3 Survival. Seller and Purchaser agree that
those representations contained in Section 8.1.1 shall survive Closing for a
period of one (1) year (that is, any proceeding based on the breach of a
representation contained in Section 8.1.1 that survives Closing must be
commenced within one (1) year subsequent to the date of such representation). In
the event that Seller breaches any representation contained in Section 8.1.1 and
Purchaser had knowledge of such breach, Purchaser shall be deemed to have waived
any right of recovery and Seller shall not have any liability in connection
therewith. 8.1.4 Definition of "Knowledge". Representations and warranties above
made to the knowledge of Seller shall not be deemed to imply any duty of
inquiry. For purposes of this Purchase Contract, the term Seller's "knowledge"
shall mean and refer to only actual knowledge of the Designated Representative
(as hereinafter defined) of the Seller and shall not be construed to refer to
the knowledge of any other partner, officer, director, agent, employee or
representative of the Seller, or any affiliate of the Seller, or to impose upon
such Designated Representative any duty to investigate the matter to which such
actual knowledge or the absence thereof pertains, or to impose upon such
Designated Representative any individual personal liability. As used herein, the
term "Designated Representative" shall refer to James R. Green.
8.1.5 Representations And Warranties Of Purchaser. For the purpose of inducing
Seller to enter into this Purchase Contract and to consummate the sale and
purchase of the Property in accordance herewith, Purchaser represents and
warrants to Seller the following as of the Effective Date and as of the Closing
Date, and such representations and warranties shall survive Closing:
8.1.5.1 No pending or, to the knowledge of Purchaser, threatened litigation
exists which if determined adversely would restrain the consummation of the
transactions contemplated by this Purchase Contract or would declare illegal,
invalid or non-binding any of Purchaser's obligations or covenants to Seller.
8.1.5.2 Purchaser has the power and authority to execute and deliver and
perform this Purchase Contract and all documents and instruments and
transactions contemplated hereby or incidental hereto, and such execution,
delivery and performance by Purchaser does not (i) violate any provision of any
law, governmental rule or regulation currently in effect, (ii) violate any
judgment, decree, writ, injunction, award, determination or order currently in
effect that names or is specifically directed at Purchaser or its property, and
(iii) require the consent, approval, order or authorization of, or any filing
with or notice to, any court or other governmental authority.
8.1.5.3 The joinder of no person or entity other than Purchaser is necessary to
consummate the transactions to be performed by Purchaser and Purchaser has all
necessary right and authority to perform such acts as are required and
contemplated by this Purchase Contract.
ARTICLE 9
CONDITIONS PRECEDENT TO CLOSING
9.1 Purchaser's Conditions. Purchaser's obligation to close under this Purchase
Contract, shall be subject to and conditioned upon the fulfillment of each and
all of the following conditions precedent: 9.1.1 Documents Delivered. All of the
documents required to be delivered by Seller to Purchaser at the Closing
pursuant to the terms and conditions hereof shall have been delivered and shall
be in form and substance reasonably satisfactory to Purchaser; 9.1.2
Representations and Warranties. Each of the representations and warranties of
Seller contained herein shall be true in all material respects as of the Closing
Date; 9.1.3 Covenants. Seller shall have complied with, fulfilled and performed
in all material respects each of the covenants, terms and conditions to be
complied with, fulfilled or performed by Seller hereunder; 9.1.4 No Other
Conditions. Notwithstanding anything to the contrary, there are no other
conditions on Purchaser's obligation to close the transaction described herein
except as expressly set forth above. 9.2 Seller's Conditions. Without limiting
any of the rights of Seller elsewhere provided for in this Purchase Contract,
Seller's obligation to close the transaction described herein shall be subject
to and conditioned upon the fulfillment of each and all of the following
conditions precedent: 9.2.1 Representations and Warranties. Purchaser's
representations and warranties set forth in this Purchase Contract shall have
been true and correct in all material respects when made, and shall be true and
correct in all material respects on the Closing Date and as of the Effective
Date as though such representations and warranties were made at and as of such
date and time. 9.2.2 Covenants. Purchaser shall have fully performed and
complied with all covenants, conditions, and other obligations in this Purchase
Contract to be performed or complied with by it at or prior to Closing
including, without limitation, payment in full of the Purchase Price. 9.2.3
Litigation. There shall not be pending or, to the knowledge of either Purchaser
or Seller, any litigation or threatened litigation which, if determined
adversely, would restrain the consummation of the transactions contemplated by
this Purchase Contract or declare illegal, invalid or nonbinding any of the
covenants or obligations of the Purchaser. 9.2.4 Hart-Scott-Rodino. Purchaser
shall have produced evidence reasonably satisfactory to Seller of Purchaser's
compliance with Hart-Scott-Rodino Act requirements or of the non-applicability
thereof to the transactions contemplated by this Purchase Contract.
ARTICLE 10
BROKERAGE
10.1 Broker. Seller represents and warrants to Purchaser that it has dealt only
with Insignia/ESQ Hotel Partners (Jack Carr), 1401 Dove Street, Suite 500,
Newport Beach, California 92660, Phone: (949) 553-0808, Fax: (949) 553-0606
("Broker") in connection with this Purchase Contract. Seller and Purchaser each
represents and warrants to the other that other than Broker, it has not dealt
with or utilized the services of any other real estate broker, sales person or
finder in connection with this Purchase Contract, and each party agrees to
indemnify the other party from and against all claims for brokerage commissions
and finder's fees arising from or attributable to the misrepresentations, acts
or omissions of the indemnifying party. 10.2 Commission. Seller agrees to pay
Broker a commission according to the terms of a separate agreement. Broker shall
not be deemed a party or third party beneficiary of this Purchase Contract.
ARTICLE 11
POSSESSION
11.1 Possession. Possession of the Property subject to the Permitted Exceptions
shall be delivered to Purchaser at the Closing, subject to Purchaser's right of
entry for inspection as set forth in ARTICLE 5.
ARTICLE 12
DEFAULTS AND REMEDIES
12.1 Seller's Remedies. In the event Purchaser terminates this Purchase Contract
following the Feasibility Period for any reason other than Seller's inability to
convey title as required by this Purchase Contract, or Purchaser defaults
hereunder prior to the Closing Date and consummation of the Closing does not
occur by reason of such termination or default by Purchaser, Seller and
Purchaser agree that it would be impractical and extremely difficult to estimate
the damages which Seller may suffer. Therefore, Seller and Purchaser hereby
agree that, except for the Purchaser's obligations to Seller under Section 5.3,
the reasonable estimate of the total net detriment that Seller would suffer in
the event that Purchaser terminates this Purchase Contract or defaults hereunder
prior to the Closing Date is and shall be, as Seller's sole remedy (whether at
law or in equity), the right to receive from the Escrow Agent and retain the
full amount of the Deposit. The payment and performance of the above as
liquidated damages is not intended as a forfeiture or penalty within the meaning
of applicable law and is intended to settle all issues and questions about the
amount of damages suffered by Seller in the applicable event, except only for
damages under Section 5.3 above, irrespective of the time when the inquiry about
such damages may take place. Upon any such failure by Purchaser hereunder, this
Purchase Contract shall be terminated, and neither party shall have any further
rights or obligations hereunder, each to the other, except for the Purchaser's
obligations to Seller under Section 5.3 above, and the right of Seller to
collect such liquidated damages to the extent not theretofore paid by Purchaser.
12.2 Purchaser's Remedies. Provided that Purchaser has not terminated this
Purchase Contract and is not otherwise in default hereunder, if the Closing does
not occur as a result of Seller's default hereunder, Purchaser's sole remedy
shall be to elect to terminate this Purchase Contract and receive reimbursement
of the Deposit (or so much thereof as has been received by Escrow Agent).
ARTICLE 13
RISK OF LOSS OR CASUALTY
13.1 Risk of Loss. The risk of loss or damage to the Property by fire or other
casualty until the Deed is recorded is assumed by the Seller, provided that the
Seller's responsibility shall be only to the extent of any recovery from
insurance now carried on the Property. Upon assignment to Purchaser of any
insurance proceeds in respect of fire or other casualty occurring between the
Effective Date and the Closing, Purchaser shall have no right to terminate this
Purchase Contract on account thereof, but Seller shall assign to Purchaser its
interest in and to any insurance policies and proceeds thereof payable as a
result of such damage or destruction. Seller shall not, in any event, be
obligated to effect any repair, replacement, and/or restoration, but may do so
at its option, in which case Seller may apply the insurance proceeds to the
costs of restoration.
ARTICLE 14
RATIFICATION
14.1 Ratification. This Purchase Contract shall be null and void unless fully
executed by Purchaser and Seller on or before 5PM, June 24, 1999.
ARTICLE 15
EMINENT DOMAIN
15.1 Eminent Domain. In the event that at the time of Closing all or any part of
the Property is (or has previously been) acquired, or is about to be acquired,
by authority of any governmental agency in purchase in lieu thereof (or in the
event that at such time there is any notice of any such acquisition by any such
governmental agency), Purchaser shall have the right, at Purchaser's option, to
terminate this Purchase Contract by giving Notice within fifteen (15) days of
the occurrence of such event and recover the Deposit hereunder, or to settle in
accordance with the terms of this Purchase Contract for the full Purchase Price
and receive the full benefit or any condemnation award. It is expressly agreed
between the parties hereto that this paragraph shall in no way apply to
customary dedications for public purposes which may be necessary for the
development of the Property.
ARTICLE 16
MISCELLANEOUS
16.1 Exhibits And Schedules. All exhibits and schedules annexed hereto are a
part of this Purchase Contract for all purposes. 16.2 Assignability. This
Purchase Contract is not assignable without first obtaining the prior written
approval of the non-assigning party; provided however that Purchaser may assign
its interest in this Purchase Contract to any entity controlled by or under
common control with Purchaser pursuant to a written assumption agreement, signed
by the assignor and the assignee and pursuant to which the named Purchaser shall
remain liable jointly and severally with such assignee as Purchaser for all
obligations of Purchaser under this Purchase Contract.
16.3 Binding Effect. This Purchase Contract shall be binding upon and inure
to the benefit of Seller and Purchaser, and their respective successors,
heirs and permitted assigns.
16.4 Captions. The captions, headings, and arrangements used in this Purchase
Contract are for convenience only and do not in any way affect, limit, amplify,
or modify the terms and provisions hereof. 16.5 Number And Gender Of Words.
Whenever herein the singular number is used, the same shall include the plural
where appropriate, and words of any gender shall include each other gender where
appropriate. 16.6 Notices. All notices, demands, requests and other
communications required pursuant to the provisions of this Purchase Contract
("Notice") shall be in writing and shall be deemed to have been properly given
or served for all purposes (i) if sent by Federal Express or the nationally
recognized overnight carrier for next business day delivery, on the first
business day following deposit of such Notice with such carrier, or (ii) if
personally delivered, on the actual date of delivery or (iii) if sent by
certified mail, return receipt requested postage prepaid, on the fifth (5th)
business day following the date of mailing addressed as follows:
If to Seller: If to Purchaser:
DBL Airport Valley Limited Jaykumar H. Shah, M.D.
Partnership 536 Alta Vista
c/o Clarion Hotel Monrovia, CA 91016
6801 S. Tucson Blvd. Phone: (626) 357-9888
Tucson, AZ 85706 Fax: (626) 256-6897
Attn: Mr. James R. Green
Phone: (520) 746-3932
Fax: (520) 889-9934
and
Argent Real Estate
Attention: David Marquette
1401 Brickell Avenue, Suite 520
Miami, FL 33131
Phone: (305) 374-3052
Fax: (305) 371-6898
with a copy to:
Richard A. Cohn, Esquire
Bryan Cave LLP
700 Thirteenth Street, N.W.
Washington, D.C. 20005-3960
Phone: (202) 508-6000
Fax: (202) 508-6200
In each case with a copy to:
with a copy to:
Fidelity National Title Insurance
Company
Margaret E. Koppen, Esquire National Title Services
Bryan Cave LLP 700 Louisiana, Suite 2600
2 N. Central Ave., Suite 2200 Houston, TX 77002
Phoenix, AZ 85004 Attn: Ms. Lolly Avant, Vice President,
Phone: (602) 364-7492 National Closing Specialist
Fax: (602) 364-7070 Phone: (800) 879-1677
Fax: (713) 225-2726
Any of the parties may designate a change of address by Notice to the
other parties. Whenever in this Purchase Contract the giving of Notice is
required, the giving of such Notice may be waived in writing by the person
or persons entitled to receive such Notice.
16.7 Governing Law And Venue. The laws of the State of Arizona shall govern the
validity, construction, enforcement, and interpretation of this Purchase
Contract, unless otherwise specified herein except for the conflict of laws
provisions thereof. All claims, disputes and other matters in question arising
out of or relating to this Purchase Contract, or the breach thereof, shall be
decided by proceedings instituted and litigated in the United States District
Court for the district in which the Property is situated, and the parties hereto
expressly consent to the venue and jurisdiction of such court. 16.8 Entirety And
Amendments. This Purchase Contract embodies the entire agreement between the
parties and supersedes all prior Purchase Contracts and understandings, if any,
relating to the Property, and may be amended or supplemented only by an
instrument in writing executed by the party against whom enforcement is sought.
16.9 Severability. If any of the provisions of this Purchase Contract is held to
be illegal, invalid, or unenforceable under present or future laws, such
provision shall be fully severable. The Purchase Contract shall be construed and
enforced as if such illegal, invalid, or unenforceable provision had never
comprised a part of this Purchase Contract; and the remaining provisions of this
Purchase Contract shall remain in full force and effect and shall not be
affected by the illegal, invalid, or unenforceable provision or by its severance
from this Purchase Contract. In lieu of such illegal, invalid, or unenforceable
provision, there shall be added automatically as a part of this Purchase
Contract a provision as similar in terms to such illegal, invalid, or
unenforceable provision as may be possible to make such provision legal, valid,
and enforceable.
16.10 Multiple Counterparts. This Purchase Contract may be executed in a number
of identical counterparts. If so executed, each of such counterparts is to be
deemed an original for all purposes and all such counterparts shall,
collectively, constitute one Purchase Contract. In making proof of this Purchase
Contract, it shall not be necessary to produce or account for more than one such
counterparts.
16.11 Further Acts. In addition to the acts and deeds recited herein and
contemplated and performed, executed and/or delivered by Seller and Purchaser,
Seller and Purchaser agree to perform, execute and/or deliver or cause to be
performed, executed and/or delivered any and all such further acts, deeds, and
assurances as may be necessary to consummate the transactions contemplated
hereby.
16.12 Construction. No provision of this Purchase Contract shall be construed in
favor of, or against, any particular party by reason of any presumption with
respect to the drafting of this Purchase Contract; both parties, being
represented by counsel, have fully participated in the negotiation of this
instrument.
16.13 Confidentiality. Purchaser shall not disclose the terms and conditions
contained in this Purchase Contract, shall keep the same confidential, provided
that Purchaser may disclose the terms and conditions of this Purchase Contract
(i) as required by law, (ii) to consummate the terms of this Purchase Contract,
or any financing relating thereto, or (iii) to Purchaser's or Seller's lenders,
attorneys and accountants. Any information provided by Seller to Purchaser under
the terms of this Purchase Contract is for informational purposes only. In
providing such information to Purchaser, Seller makes no representation or
warranty, express, written, oral, statutory, or implied, and all such
representations and warranties are hereby expressly excluded. Purchaser shall
not in any way be entitled to rely upon the accuracy of such information. Such
information is also confidential and Purchaser shall be prohibited from making
such information public to any other person or entity other than its agents and
legal representatives, without Seller's prior written authorization, which may
be granted or denied in Seller's sole discretion.
16.14 Time Of The Essence. It is expressly agreed by the parties hereto that
time is of the essence with respect to this Purchase Contract. 16.15 Cumulative
Remedies And Waiver. Except as otherwise provided herein, no remedy herein
conferred or reserved is intended to be exclusive of any other available remedy
or remedies, but each and every such remedy shall be cumulative and shall be in
addition to every other remedy given under this Purchase Contract or now or
hereafter existing at law or in equity. No delay or omission to exercise any
right or power accruing upon any default, omission, or failure of performance
hereunder shall impair any right or power or shall be construed to be a waiver
thereof, but any such right and power may be exercised from time to time and as
often as may be deemed expedient. No waiver, amendment, release, or modification
of this Purchase Contract shall be established by conduct, custom, or course of
dealing. 16.16 Litigation Expenses. In the event either party hereto commences
litigation against the other to enforce its rights hereunder, the prevailing
party in such litigation shall be entitled to recover from the other party its
reasonable attorneys' fees and expenses incidental to such litigation. 16.17
Time Periods. Should the last day of a time period fall on a weekend or legal
holiday, the next Business Day thereafter shall be considered the end of the
time period.
16.18 Exchange. At Seller's sole cost and expense, Seller may structure the sale
of the Property to Purchaser as a "like kind exchange" under Internal Revenue
Code Section 1031 whereby Seller will acquire certain property (the "Like Kind
Exchange Property") in conjunction with the sale of the Property (the "Like Kind
Exchange"). Purchaser shall cooperate fully and promptly with Seller's conduct
of the Like Kind Exchange, provided that all costs and expenses generated in
connection with the Like Kind Exchange shall be borne solely by Seller, and
Purchaser shall not be required to take title to or contract for the purchase of
any other property. If Seller uses a qualified intermediary to effectuate the
exchange, any assignment of the rights or obligations of Seller hereunder shall
not relieve, release or absolve Seller of its obligations to Purchaser. In no
event shall the Closing Date be delayed by the Like Kind Exchange. Seller shall
indemnify and hold harmless Purchaser from and against any and all liability
arising from and out of the Like Kind Exchange.
16.19 Bulk Sales. Purchaser and Seller hereby agree that Seller shall have no
responsibility for and shall take no action relating to compliance with the
"bulk sales law" of any applicable jurisdiction with respect to the transactions
contemplated by this Purchase Contract. Purchaser shall indemnify and hold
Seller harmless from and against any and all claims relating to any failure to
comply with the "bulk sales law" of any applicable jurisdiction with respect to
the sale and transfer of the Property. 16.20 Exclusivity. Purchaser and Seller
hereby agree that Seller may continue to market the Property during the term of
this Agreement, and any agreement executed by Seller during the term of this
Agreement shall disclose the existence of this Agreement and a contingency to
the closing of such additional agreement shall be the cancellation or other
termination of this Agreement.
16.21 First Amendment. Purchaser and Seller hereby acknowledge that the parties
are executing that certain First Amendment to Purchase and Sale Contract of even
date with this Agreement.
NOW WHEREFORE, the parties hereto have executed this Purchase Contract as of the
date first set forth above.
Seller: DBL AIRPORT VALLEY LIMITED PARTNERSHIP,
an Arizona limited partnership
By: DREXEL BURNHAM LAMBERT REAL ESTATE
ASSOCIATES III, a New York limited
partnership, Its General Partner
By: DBL PROPERTIES CORPORATION, a
New York corporation, Its
General Partner
By:
Printed:
Title:
Purchaser:
JAYKUMAR H. SHAH, M.D.
EXHIBITS:
Exhibit 1.1.9 Legal Description of Land
Exhibit 1.1.23 Property Contracts
Exhibit 3.1.1 Escrow Instructions
Exhibit 7.1.3 Prorations
Exhibit 7.2.1.1 Special Warranty Deed
Exhibit 7.2.1.2 Bill of Sale
Exhibit 7.2.1.3 Assignment and Assumption Agreement
First Amendment to Purchase and Sale Contract
<PAGE>
EXHIBIT 1.1.23
Property Contracts
1. Permit to Operate, issued by PIMA COUNTY HEALTH DEPARTMENT, expiration
date November 30, 1999.
2. Business License, issued by CITY OF TUCSON OCCUPATIONAL OR LIQUOR,
expiration date December 31, 1999.
3. Warranty and Service Agreement, dated January 20, 1997, by and between
MIS ASSOCIATES, INC., a Georgia corporation and Seller.
4. Lease, dated April 20, 1987, by and between THE LAUNDRY MAN and Seller.
5. Equipment Lease/Use Agreement (re: copy machine), dated December 8,
1995, by and between COPYING DUPLICATING PRODUCTS, INC. and Seller.
6. Agreement for Spectravision Pay Per View Movies and Other Services, dated
June 16, 1998, by and between ON COMMAND VIDEO, a Delaware corporation and
Seller.
7. Agreement (re: postage meter), by and between NEOPOST LEASING/NEOPOST
and Seller.
8. Hotel/Motel Bulk Rate Agreement, dated as of June 8, 1998, by and between
ROBIN CABLE SYSTEMS OF TUCSON, an Arizona limited partnership, d/b/a TCI
of Tucson and Seller.
<PAGE>
EXHIBIT 3.1.1
ESCROW INSTRUCTIONS
SELLER AND BUYER:
1. Will deposit with Escrow Agent all documents necessary to complete the
sale as established by the terms of these instructions and authorize Escrow
Agent to deliver or record said documents as required herein.
2. Direct that all money payable be paid to Escrow Agent unless
otherwise specified.
3. Authorize Escrow Agent to act upon any statement furnished by a lien
holder or his agent, without liability or responsibility for the accuracy of
such statement.
4. Authorize Escrow Agent to pay from available funds held by it for said
purpose amounts necessary to procure documents and to pay charges and
obligations necessary to consummate this transaction.
5. Direct that the disbursement of any funds shall be made by check
of Escrow Agent.
6. Direct that when these instructions and all title requirements have
been complied with, Escrow Agent shall deliver, by recording in the appropriate
public office, all necessary documents, disburse all funds and issue the title
insurance policy.
7. Shall indemnify and save harmless Escrow Agent against all costs,
damages, attorney's fees, expenses and liabilities which it may incur or sustain
in connection with these instructions, any interpleader action, or any servicing
account arising herefrom (except for any wrongful acts or negligence on the part
of Escrow Agent) and will pay the same on demand.
SELLER AND BUYER AGREE:
8. Escrow Agent has the right to resign upon written ten-day notice, if
such right is exercised, all funds and documents shall be returned to the party
who deposited them.
9. Escrow Agent shall not accept payments under a cancellation notice,
unless in cash, certified or cashier's check or money order.
10. Should Escrow Agent be closed on any day of compliance with these
instructions, the requirement may be met on the next succeeding day Escrow Agent
is open for business.
11. Time is of the essence of any agreement to pay or perform hereunder
which agreement shall remain unpaid or unperformed as of close of escrow. No
payment of Buyer of such amounts shall be received or receipted for by Escrow
Agent unless all amounts due as of the date of compliance are paid unless and
until written authority therefor has been delivered to Escrow Agent by the payee
of said amount.
12. Escrow Agent may at any time, at its discretion, commence a civil
action to interplead any conflicting demands to a court of competent
jurisdiction.
13. It is fully understood that Fidelity National Title serves as an
escrow agent only in connection with these instructions and cannot give legal
advice to any party hereto.
14. The title insurance provided for, unless otherwise specified, shall be
evidenced by the standard form of title insurance policies on file with the
Insurance Director of the State of Arizona subject to exceptions shown in the
commitment for title insurance and title insurance policy issued.
***
<PAGE>
EXHIBIT 7.2.1.1
SPECIAL WARRANTY DEED
WHEN RECORDED RETURN TO:
Margaret E. Koppen, Esq.
Bryan Cave LLP
2 North Central Avenue, 22nd Floor
Phoenix, AZ 85004
SPECIAL WARRANTY DEED
DBL AIRPORT VALLEY LIMITED PARTNERSHIP, an Arizona limited
partnership ("Grantor"), for valuable consideration paid to Grantor, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, does hereby convey to JAYKUMAR H. SHAH, M.D. ("Grantee"),
its successors and assigns forever, all Grantor's interest in the property,
together with all Grantor's interest, if any, in any improvements and fixtures
located thereon, and all rights and appurtenances pertaining thereto
(collectively, the "Property") legally described on Exhibit A attached hereto
and made a part hereof.
Subject to existing taxes, assessments, liens, encumbrances,
covenants, conditions, restrictions, rights of way, reservations in patents,
easements, all other matters of record, and such matters as an accurate survey
or visual inspection of the Property would disclose.
Grantor warrants to Grantee that Grantor will defend title to the
Property against the acts of Grantor and none other subject to the matters
stated herein.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, Grantor has executed this Special Warranty Deed
this ____ day of __________, 1999.
GRANTOR:
DBL AIRPORT VALLEY LIMITED PARTNERSHIP,
an Arizona limited partnership
By: DREXEL BURNHAM LAMBERT REAL ESTATE
ASSOCIATES III, a New York limited
partnership, Its General Partner
By: DBL PROPERTIES CORPORATION, a
New York corporation, Its
General Partner
By:
Printed:
Title:
STATE OF ______________ )
) ss.
County of _____________ )
The foregoing instrument was acknowledged before me this ____ day of
__________, 1999, by _______________, the _______________ of DBL PROPERTIES
CORPORATION, a New York corporation, the general partner of DREXEL BURNHAM
LAMBERT REAL ESTATE ASSOCIATES III, a New York limited partnership, the general
partner of DBL AIRPORT VALLEY LIMITED PARTNERSHIP, an Arizona limited
partnership, on behalf of the partnership.
-----------------------------------
Notary Public
My Commission Expires:
- ----------------------
<PAGE>
EXHIBIT 7.2.1.2
BILL OF SALE
BILL OF SALE
FOR GOOD AND VALUABLE CONSIDERATION, the receipt of which is hereby
acknowledged, DBL AIRPORT VALLEY LIMITED PARTNERSHIP, an Arizona limited
partnership ("Seller"), hereby assigns, transfers, grants, bargains, sells,
conveys and delivers unto JAYKUMAR H. SHAH, M.D. ("Purchaser"), all of its
right, title and interest in and to any personal property owned by Seller and
located on the real property described on Exhibit A attached hereto and
incorporated herein by this reference (the "Personal Property"), without
representation, warranty or recourse of any kind;
TO HAVE AND TO HOLD forever the Personal Property, together with all
rights and appurtenances related thereto;
DATED this ______ day of ____________, 1999.
SELLER:
GRANTOR:
DBL AIRPORT VALLEY LIMITED PARTNERSHIP,
an Arizona limited partnership
By: DREXEL BURNHAM LAMBERT REAL ESTATE
ASSOCIATES III, a New York limited
partnership, Its General Partner
By: DBL PROPERTIES CORPORATION, a
New York corporation, Its
General Partner
By:
Printed:
Title:
BUYER:
-----------------------------------------
JAYKUMAR H. SHAH, M.D.
<PAGE>
EXHIBIT 7.2.1.3
ASSIGNMENT AND ASSUMPTION AGREEMENT
ASSIGNMENT AND ASSUMPTION AGREEMENT
This ASSIGNMENT AND ASSUMPTION AGREEMENT("Agreement") is made as of the
________ day of _______________, 1999, by and among DBL AIRPORT VALLEY
LIMITED PARTNERSHIP, an Arizona limited partnership ("Assignor") and JAYKUMAR
H. SHAH, M.D. ("Assignee").
RECITALS:
A. Assignor is selling to Assignee certain real and personal property
known as the Clarion Hotel, Tucson Airport, legally described on Exhibit A
attached hereto (the "Property").
B. Assignor is the owner of certain contract rights and other items of
intangible personal property relating to the ownership or operation of the
Property owned by Seller defined in that certain Purchase and Sale Contract,
dated ___________, 1999 ("Purchase and Sale Contract"), by and between Assignor
and Assignee as the ("Miscellaneous Property Assets"). The term "Miscellaneous
Property Assets" shall have the same meaning herein as in the Purchase And Sale
Contract.
B. Assignor desires to assign to Assignee its rights, title and
interest in the Miscellaneous Property Assets.
C. Assignee wishes to assume the Miscellaneous Property Assets and
accept the assignment from Assignor subject to the terms and conditions set
forth herein.
AGREEMENTS:
NOW THEREFORE, in consideration of the mutual covenants contained herein,
and payment of other valuable consideration, Assignor and Assignee agree as
follows:
1. Assignment. Assignor hereby assigns to Assignee all its rights,
title and interest in the Miscellaneous Property Assets, and Assignee hereby
assumes any and all obligations relating to the Miscellaneous Property Assets
and accepts such assignment.
2. Performance by Assignee. By accepting this Assignment, Assignee hereby
assumes and agrees to perform all obligations of the Assignor under the
Miscellaneous Property Assets as may accrue from and after the date of this
Agreement. Assignee hereby agrees to indemnify, defend, protect and hold
harmless Assignor from and against all losses, damages, claims, liabilities,
judgments and costs (including attorneys' fees) which Assignor may incur or
sustain by reason of any failure of Assignee to perform the obligations assumed
herein.
3. Purchase Agreement. This Agreement is executed and delivered by
the parties hereto in accordance with the Purchase and Sale Contract.
4. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and
assigns.
5. Counterparts. This Agreement may be executed in one or more
counterparts, each of which may be executed by one or more of the signatory
parties. Signature pages may be detached from the counterparts and attached
to a single copy of this Agreement to form one legally effective document.
IN WITNESS WHEREOF, this Agreement is executed effective as of the date
first above written.
ASSIGNOR:
DBL AIRPORT VALLEY LIMITED PARTNERSHIP,
an Arizona limited partnership
By: DREXEL BURNHAM LAMBERT REAL ESTATE
ASSOCIATES III, a New York limited
partnership, Its General Partner
By: DBL PROPERTIES CORPORATION, a
New York corporation, Its
General Partner
By:
Printed:
Title:
ASSIGNEE:
----------------------------------------
JAYKUMAR H. SHAH, M.D.
<PAGE>
EXHIBIT 7.1.3
PRORATIONS
The following items shall be prorated between Seller and Purchaser as of
the Closing Date. Where appropriate, such adjustments shall be made on the basis
of actual days elapsed over the relevant billing period, unless otherwise
provided:
(a) Fuel, electricity, water, sewer, gas, electric, telephone and other
utility charges and rents (except such metered utility charges which
Seller shall cause to be read on the Closing Date and billed to Seller).
All utility deposits shall be transferred to Purchaser, and an adjustment
shall be made to the Purchase Price for such deposits.
(b) Prepaid guest room deposits and all other deposits for advance
bookings, reservations, banquets, meals, parties, meetings, functions or
services.
(c) Rents; deposits; amounts prepaid, accrued but unpaid, past due and/or
delinquent under the Contracts; equipment leases and/or conditional sale
contracts assumed by Purchaser (if any).
(d) Security deposits (the full amount thereof, if any), and rent under
the Commercial Leases.
(e) Guest room revenues representing the sale of products and/or the
delivery of services to customers for the period of time at or prior to
7:00 a.m. on the Closing Date (but only as to products sold and delivered
or services fully delivered and completed prior to such time) shall belong
to Seller; and guest room revenues representing the sale of products
and/or the delivery of services to customers for the period of time from
and after 7:00 a.m. on the Closing Date shall belong to Purchaser. At 7:00
a.m. on the Closing Date, Seller shall cease to record on its books and
records all guest room transactions for guests then on the premises.
(f) Restaurant, gift shop, tennis shop, floral shop, public room and like
revenues for products and/or services fully delivered or provided to
customers at or prior to 7:00 a.m. on the Closing Date shall belong to
Seller; and such revenues for products and/or services delivered or
provided to customers from and after 7:00 a.m. on the Closing Date or with
respect to products and/or services delivered or completed after 7:00 a.m.
on the Closing Date shall belong to Purchaser. At 7:00 a.m. on the Closing
Date, Seller shall cease to record all such transactions on its books and
records.
(g) General property taxes, special taxes, special assessments and
personal property taxes payable, arising or accruing through the Closing
Date.
(h) Any real estate ad valorem or similar taxes for the Property, or any
installment of assessments payable in installments which installment is
payable in the year of Closing, shall be prorated to the Closing Date
based upon actual days involved. The proration of real property taxes or
installments of assessments shall be based upon the assessed valuation and
tax rate figures for the year in which the Closing occurs to the extent
the same are available; provided, that in the event that actual figures
(whether for the assessed value of the Property or for the tax rate) for
the year of Closing are not available at the Closing Date, the proration
shall be made using figures from the preceding year.
***
<PAGE>
Exhibit 10.13
FIRST AMENDMENT TO PURCHASE AND SALE CONTRACT
THIS FIRST AMENDMENT TO PURCHASE AND SALE CONTRACT ("Amendment") is
entered into as of June 24, 1999 (the "Effective Date") by and among DBL AIRPORT
VALLEY LIMITED PARTNERSHIP, an Arizona limited partnership ("Seller") and
JAYKUMAR H. SHAH, M.D. ("Purchaser").
NOW, THEREFORE, for good and valuable consideration, the receipt,
sufficiency and validity of which are hereby acknowledged, the parties hereby
agree that that certain Purchase and Sale Contract, dated as of June 24, 1999,
by and among Seller and Purchaser, is hereby amended as follows:
1. Property Contracts. At any time prior to Closing, Purchaser may request
in writing that, as of the Closing Date, Seller terminate any Property Contracts
which are cancelable without penalty or payment, and Seller shall use its best
efforts to cancel such Property Contracts as of the Closing Date.
2. Franchise Agreement. Purchaser agrees to: (i) assume the obligations of
Seller as licensee under the Franchise Agreement and cause Choice Hotels to
release Seller from its obligations and liabilities under the Franchise
Agreement, subject to the approval of Choice Hotels pursuant to the Franchise
Agreement; or (ii) allow Seller to cancel the Franchise Agreement as of Closing,
whereupon Purchaser shall pay any and all costs, damages or expenses relating to
such cancellation. Purchaser shall be solely responsible for obtaining any
consents and payment of any fees relating to assignment of the Franchise
Agreement to Purchaser at Closing and release of Seller by Choice Hotels from
its obligations and liabilities under the Franchise Agreement, and Seller shall
reasonably cooperate with Purchaser regarding such assignment. Release of Seller
from any and all obligations and liabilities under the Franchise Agreement by
Choice Hotels shall be a condition of Closing. If Purchaser has not obtained the
consent of Choice Hotels to assignment of the Franchise Agreement to Purchaser
and release of Seller from its obligations and liabilities under the Franchise
Agreement by five (5) days prior to Closing, Purchaser shall give Seller written
notice on such date of same.
3. Extension of Closing. Section 7.1.2 of the Purchase Contract
regarding extension of the Closing Date by Seller is hereby deleted in its
entirety.
4. Purchase Price. Section 3.1 of the Purchase Contract is amended
so that the Purchase Price of the Property shall be FIVE MILLION SEVEN
HUNDRED THOUSAND DOLLARS ($5,700,000.00), in cash or other immediately
available funds.
5. Deed. Section 7.2.1.1 of the Purchase Contract is amended by adding the
following: "Upon the written request of Purchaser prior to Closing, Seller shall
convey the Property to Purchaser by two (2) separate Deeds, with each Deed
containing a portion of the Property designated by Purchaser, so long as such
conveyances can be accomplished without any additional liability or cost to
Seller."
6. Amendment. Purchaser and Seller hereby amend the Purchase Contract as
stated herein. Terms not otherwise defined within this Amendment shall have the
meanings ascribed to them in the Purchase Contract. All terms, covenants,
conditions and provisions of the Purchase Contract are hereby reinstated,
ratified, affirmed and remain in full force and effect, as modified by this
Amendment. All references to the Purchase Contract shall, hereafter, include the
provisions of this Amendment.
7. Counterparts. This Amendment may be executed in several
counterparts, each of which counterparts shall be deemed an original
instrument and all of which together shall constitute a single Amendment.
NOW WHEREFORE, the parties hereto have executed this Amendment as of the
date first set forth above.
Seller: DBL AIRPORT VALLEY LIMITED PARTNERSHIP,
an Arizona limited partnership
By: DREXEL BURNHAM LAMBERT REAL ESTATE
ASSOCIATES III, a New York limited
partnership, Its General Partner
By: DBL PROPERTIES CORPORATION, a
New York corporation, Its
General Partner
By:
Printed:
Title:
Purchaser:
JAYKUMAR H. SHAH, M.D.
<PAGE>
Exhibit 10.14
SECOND AMENDMENT TO AND REINSTATEMENT
OF PURCHASE AND SALE CONTRACT
THIS SECOND AMENDMENT TO AND REINSTATEMENT OF PURCHASE AND SALE
CONTRACT ("Second Amendment") is made effective as of the 29th day of September,
1999 (the "Effective Date") by and among DBL AIRPORT VALLEY LIMITED PARTNERSHIP,
an Arizona limited partnership ("Seller"), and JAYKUMAR H. SHAH, M.D.
("Purchaser").
RECITALS
A. Seller and Purchaser entered into that certain Purchase and Sale
Contract and First Amendment thereto made effective as of June 24, 1999
(collectively, the "Purchase Contract") for purchase and sale of hotel property
located in Tucson, Pima County, Arizona as more particularly described in the
Purchase Contract.
B. Purchaser notified Seller that Purchaser was unable to close this
transaction by September 17, 1999 (the "Closing Date," as defined in the
Purchase Contract).
C. The parties desire to reinstate and amend the Purchase Contract
upon the terms and conditions provided in this Second Amendment.
NOW, THEREFORE, and in consideration of the premises, the mutual
agreements herein and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Seller and Purchaser agree as
follows:
1. Defined Terms. Except as otherwise provided herein, all
capitalized terms used in this Second Amendment have the meanings ascribed in
the Purchase Contract.
2. Ratification and Reinstatement. The Purchase Contract is hereby
reinstated, subject to the modifications and agreements expressly set forth
above. Except as so amended by this Second Amendment, the Purchase Contract
remains in full force and effect.
3. Closing Date. Section 1.1.6 of the Purchase Contract is amended to
provide that the Closing Date shall be extended to October 8, 1999. Purchaser
may elect to extend the Closing Date for up to a maximum of two (2) additional
consecutive twenty-one (21)-day periods (each an "Extension Period") by
delivering written notice thereof to Seller not later than seven (7) calendar
days prior to the expiration of the then effective Closing Date, which notice
shall be accompanied by payment of an additional Fifty Thousand Dollars
($50,000.00) for each Extension Period requested (and which extensions shall be
conditioned upon such payment in each case). All sums paid to extend the Closing
Date shall be nonrefundable (except in the event of a Seller default) but, in
the event the sale of the Property shall close under the Purchase Contract, all
such sums shall be applicable to the Purchase Price at Closing.
4. Closing Extension Fees. As inducement for Seller's agreement to
reinstate the Purchase Contract and extend the Closing Date, on the date hereof
Purchaser shall pay directly to Seller the sum of Fifty Thousand Dollars
($50,000.00), in immediately available funds, which sum shall be non-refundable
(except in the event of a Seller default) but, in the event the sale of the
Property shall close under the Purchase Contract, which sum shall be applicable
to the Purchase Price at Closing.
5. Deposit. As further consideration for Seller's agreement to enter into
this Second Amendment, Purchaser agrees that the Deposit in the amount of One
Hundred Thousand Dollars ($100,000.00) currently held by Escrow Agent shall be
immediately released and paid over to Seller. This Second Amendment shall serve
as a binding instruction to the Escrow Agent to pay the entire amount of Deposit
to Seller pursuant to wire instructions received from Seller and the Escrow
Agent may rely conclusively on this Second Amendment to pay the Deposit to
Seller.
6. Waiver of Conditions Precedent. Purchaser hereby irrevocably confirms
the satisfaction or waiver of all contingencies and conditions precedent to
Purchaser's obligations under the Purchase Contract, however the foregoing shall
not release Seller from the obligation to deliver the closing documents, make
other closing deliveries and comply with the closing requirements applicable to
Seller as set forth in the Purchase Contract. Purchaser further acknowledges
that Purchaser's obligation to purchase the Property is non-contingent and
unconditional except only for satisfaction of the conditions expressly stated in
Sections 9.1.1, 9.1.2 and 9.1.3 of the Purchase Contract.
7. Counterparts. This Second Amendment may be executed in several
counterparts and by facsimile, each of which shall be deemed an original, and
of which together shall constitute one and the same document.
[SIGNATURES ON FOLLOWING PAGE]
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Second Amendment as of
the date first set forth above.
SELLER: DBL AIRPORT VALLEY LIMITED
PARTNERSHIP, an Arizona limited
partnership
By: DREXEL BURNHAM LAMBERT
REAL ESTATE ASSOCIATES III,
a New York limited partnership,
Its General Partner
By: DBL PROPERTIES CORPORATION,
a New York corporation,
Its General Partner
By:____________________________
Printed Name:___________________
Title:__________________________
PURCHASER: ________________________________
JAYKUMAR H. SHAH, M.D.
<PAGE>
Exhibit 10.15
THIRD AMENDMENT TO PURCHASE AND SALE CONTRACT
THIS THIRD AMENDMENT TO PURCHASE AND SALE CONTRACT ("Amendment") is
entered into on December 2, 1999 (the "Effective Date") by and among DBL AIRPORT
VALLEY LIMITED PARTNERSHIP, an Arizona limited partnership ("Seller") and JBR
HOSPITALITY GROUP, LLC, an Arizona limited liability company ("Purchaser").
NOW, THEREFORE, for good and valuable consideration, the receipt,
sufficiency and validity of which are hereby acknowledged, the parties hereby
agree that that certain Purchase and Sale Contract, dated as of June 24, 1999,
by and between Seller and JAYKUMAR H. SHAH, M.D. successor-in-interest to
Purchaser; amended by that certain First Amendment to Purchase and Sale
Contract, dated as of June 24, 1999; and further amended by that certain Second
Amendment to Purchase and Sale Contract, dated as of September 29, 1999
(collectively, the "Purchase Contract"), is hereby amended as follows:
1. Purchase Price. Section 3.1 of the Purchase Contract is amended
so that the Purchase Price of the Property shall be FIVE MILLION FOUR HUNDRED
FIFTY THOUSAND DOLLARS ($5,450,000.00), in cash or other immediately
available funds.
2. Closing Date. Section 1.1.6 of the Purchase Contract is hereby
amended such that the Closing Date shall be on or before December 10, 1999.
3. Evidence of Loan. On or before December 2, 1999, Purchaser shall
provide to Seller evidence adequate to Seller in Seller's sole discretion of:
(a) commitment by a third party to make a loan ("Loan") to Purchaser to acquire
the Property; and (b) confirmation of Purchaser's payment to such lender of a
commitment fee in the sum of one percent (1%) of the Loan.
4. Deposit of Funds. On or before December 3, 1999, Purchaser shall
deposit with Escrow Agent in cash the sum of ONE MILLION THREE HUNDRED FIFTY
THOUSAND DOLLARS ($1,350,000.00). Of this amount, ONE HUNDRED THOUSAND DOLLARS
($100,000.00) shall be an addition to the Deposit, shall be non-refundable to
Purchaser (except in the event of a Seller default), shall be immediately
released and paid over to Seller, and, in the event the sale of the Property
shall close under the Purchase Contract, shall be applicable to the Purchase
Price at Closing.
5. Legal Description. The legal description attached to the
Purchase Contract as Exhibit A is hereby replaced with the legal description
attached to this Amendment as Exhibit A.
6. Amendment. Purchaser and Seller hereby amend the Purchase Contract as
stated herein. Terms not otherwise defined within this Amendment shall have the
meanings ascribed to them in the Purchase Contract. All terms, covenants,
conditions and provisions of the Purchase Contract are hereby reinstated,
ratified, affirmed and remain in full force and effect, as modified by this
Amendment. All references to the Purchase Contract shall, hereafter, include the
provisions of this Amendment.
7. Counterparts. This Amendment may be executed in several
counterparts, each of which counterparts shall be deemed an original
instrument and all of which together shall constitute a single Amendment.
NOW WHEREFORE, the parties hereto have executed this Amendment on the date
first set forth above.
Seller: DBL AIRPORT VALLEY LIMITED PARTNERSHIP,
an Arizona limited partnership
By: DREXEL BURNHAM LAMBERT REAL ESTATE
ASSOCIATES III, a New York limited
partnership, Its General Partner
By: DBL PROPERTIES CORPORATION, a
New York corporation, Its
General Partner
By:
Printed:
Title:
Purchaser: JBR HOSPITALITY GROUP, LLC, an Arizona
limited liability company
By:
Printed:
Title:
<PAGE>
Exhibit 10.16
FOURTH AMENDMENT TO PURCHASE AND SALE CONTRACT
THIS FOURTH AMENDMENT TO PURCHASE AND SALE CONTRACT ("Amendment") is
entered into on December 10, 1999 (the "Effective Date") by and among DBL
AIRPORT VALLEY LIMITED PARTNERSHIP, an Arizona limited partnership ("Seller")
and JBR HOSPITALITY GROUP, LLC, an Arizona limited liability company
("Purchaser").
NOW, THEREFORE, for good and valuable consideration, the receipt,
sufficiency and validity of which are hereby acknowledged, the parties hereby
agree that that certain Purchase and Sale Contract, dated as of June 24, 1999,
by and between Seller and JAYKUMAR H. SHAH, M.D. successor-in-interest to
Purchaser; amended by that certain First Amendment to Purchase and Sale
Contract, dated as of June 24, 1999; further amended by that certain Second
Amendment to Purchase and Sale Contract, dated as of September 29, 1999; and
further amended by that certain Third Amendment to Purchase and Sale Contract,
dated December 2, 1999 (collectively, the "Purchase Contract"), is hereby
amended as follows:
1. Closing Date. Section 1.1.6 of the Purchase Contract is hereby
amended such that the Closing Date shall be on or before December 15, 1999.
2. Release of Funds. On December 10, 1999, the sum of FIFTY THOUSAND
DOLLARS ($50,000.00) of the amounts deposited with Escrow Agent by Purchaser
shall be immediately released and paid over to Seller, shall be non-refundable
to Purchaser (except in the event of a Seller default), and, in the event the
sale of the Property shall close under the Purchase Contract, shall be
applicable to the Purchase Price at Closing.
3. Amendment. Purchaser and Seller hereby amend the Purchase Contract as
stated herein. Terms not otherwise defined within this Amendment shall have the
meanings ascribed to them in the Purchase Contract. All terms, covenants,
conditions and provisions of the Purchase Contract are hereby reinstated,
ratified, affirmed and remain in full force and effect, as modified by this
Amendment. All references to the Purchase Contract shall, hereafter, include the
provisions of this Amendment.
4. Counterparts. This Amendment may be executed in several
counterparts, each of which counterparts shall be deemed an original
instrument and all of which together shall constitute a single Amendment.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
NOW WHEREFORE, the parties hereto have executed this Amendment on the date
first set forth above.
Seller: DBL AIRPORT VALLEY LIMITED PARTNERSHIP,
an Arizona limited partnership
By: DREXEL BURNHAM LAMBERT REAL ESTATE
ASSOCIATES III, a New York limited
partnership, Its General Partner
By: DBL PROPERTIES CORPORATION, a
New York corporation, Its
General Partner
By:
Printed:
Title:
Purchaser: JBR HOSPITALITY GROUP, LLC, an Arizona
limited liability company
By:
Printed:
Title:
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from DREXEL
BURNHAM LAMBERT REAL ESTATE ASSOCIATES III 1999 Fourth Quarter 10-KSB and is
qualified in its entirety by reference to such 10-KSB filing.
</LEGEND>
<CIK> 0000761657
<NAME> DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES III
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 5,836
<SECURITIES> 0
<RECEIVABLES> 23
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0 <F1>
<PP&E> 7,650
<DEPRECIATION> 0
<TOTAL-ASSETS> 13,509
<CURRENT-LIABILITIES> 0 <F1>
<BONDS> 7,650
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 8,269
<SALES> 0
<TOTAL-REVENUES> 1,700
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,012
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 866
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (312)
<DISCONTINUED> 1,162
<EXTRAORDINARY> 24
<CHANGES> 0
<NET-INCOME> 874
<EPS-BASIC> 12.49 <F2>
<EPS-DILUTED> 0
<FN>
<F1> Registrant has an unclassified balance sheet. <F2> Multiplier is 1.
</FN>
</TABLE>
